EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among:
AVI BIOPHARMA, INC.,
an Oregon corporation;
ELK ACQUISITION, INC.,
a Delaware corporation; and
EXEGENICS INC.,
a Delaware corporation
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Dated as of July 16, 2003
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TABLE OF CONTENTS
PAGE
SECTION 1. THE OFFER.................................................................2
1.1 Conduct of the Offer.........................................................2
1.2 Company Actions..............................................................4
1.3 Directors....................................................................6
1.4 Common Top-Up Option.........................................................7
1.5 Preferred Top-Up Option......................................................8
SECTION 2. MERGER TRANSACTION........................................................9
2.1 Merger of Acquisition Sub into the Company...................................9
2.2 Effect of the Merger.........................................................9
2.3 Closing; Effective Time......................................................9
2.4 Certificate of Incorporation and Bylaws; Directors and Officers.............10
2.5 Conversion of Shares........................................................10
2.6 Surrender of Certificates; Stock Transfer Books.............................11
2.7 Shares Subject to Appraisal Rights..........................................13
2.8 Further Action..............................................................14
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................14
3.1 Subsidiaries; Due Organization; Etc.........................................14
3.2 Certificate of Incorporation and Bylaws.....................................15
3.3 Capitalization, Etc.........................................................15
3.4 SEC Filings; Financial Statements...........................................16
3.5 Absence of Changes..........................................................18
3.6 Title to Assets.............................................................19
3.7 Loans and Advances..........................................................20
3.8 Leasehold...................................................................20
3.9 Intellectual Property.......................................................20
3.10 Contracts...................................................................21
3.11 Performance of Services.....................................................23
3.12 Liabilities.................................................................23
3.13 Compliance with Legal Requirements..........................................23
3.14 Certain Business Practices..................................................23
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3.15 Governmental Authorizations.................................................23
3.16 Tax Matters.................................................................24
3.17 Employee and Labor Matters; Benefit Plans...................................25
3.18 Environmental Matters.......................................................28
3.19 Insurance...................................................................29
3.20 Transactions with Affiliates................................................29
3.21 Legal Proceedings; Orders...................................................30
3.22 Authority; Inapplicability of Anti-takeover Statutes; Binding Nature of
Agreement...................................................................30
3.23 Section 203 of the DGCL Not Applicable......................................31
3.24 No Discussions..............................................................31
3.25 Intent to Tender; Vote Required.............................................31
3.26 Non-Contravention; Consents.................................................31
3.27 Fairness Opinion............................................................32
3.28 Financial Advisor...........................................................32
3.29 Rights Agreement............................................................33
3.30 Full Disclosure.............................................................33
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB.............33
4.1 Valid Existence.............................................................34
4.2 Capitalization..............................................................34
4.3 SEC Filings; Financial Statements...........................................34
4.4 Authority; Binding Nature of Agreement......................................34
4.5 Non-Contravention; Consents.................................................35
4.6 No Vote Required............................................................35
4.7 Disclosure..................................................................35
SECTION 5. CERTAIN COVENANTS OF THE COMPANY.........................................35
5.1 Access and Investigation....................................................35
5.2 Operation of the Company's Business.........................................36
5.3 No Solicitation.............................................................39
SECTION 6. ADDITIONAL COVENANTS OF THE PARTIES......................................41
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6.1 Stockholder Approval; Proxy Statement.......................................41
6.2 Regulatory Approvals........................................................42
6.3 Stock Options; Warrants.....................................................43
6.4 Employee Matters............................................................43
6.5 Indemnification of Executive Officers and Directors.........................43
6.6 Additional Agreements.......................................................44
6.7 Disclosure..................................................................44
6.8 Letter of the Company's Accountants.........................................45
6.9 Listing.....................................................................45
6.10 Affiliate Agreements........................................................45
6.11 Section 16 Matters..........................................................45
SECTION 7. CONDITIONS PRECEDENT TO THE MERGER.......................................46
7.1 Stockholder Approval........................................................46
7.2 No Restraints...............................................................46
7.3 Effectiveness of Registration Statement.....................................46
7.4 Consummation of Offer.......................................................46
SECTION 8. TERMINATION..............................................................46
8.1 Termination.................................................................46
8.2 Effect of Termination.......................................................49
8.3 Expenses....................................................................49
SECTION 9. MISCELLANEOUS PROVISIONS.................................................50
9.1 Amendment...................................................................50
9.2 Waiver......................................................................50
9.3 No Survival of Representations and Warranties...............................50
9.4 Entire Agreement; Counterparts..............................................50
9.5 Applicable Law; Jurisdiction................................................50
9.6 Disclosure Schedule.........................................................50
9.7 Time is of the Essence......................................................51
9.8 Assignability...............................................................51
9.9 Notices.....................................................................51
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9.10 Cooperation.................................................................52
9.11 Severability................................................................52
9.12 Construction................................................................52
ANNEXES
Annex I - Certain Definitions
Annex II - Conditions to the Offer
1.
EXHIBITS
Exhibit A - Form of Certificate of Incorporation of the Surviving Corporation
Exhibit B - Form of Affiliate Agreement
2.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of July 16, 2003, by and among: AVI BIOPHARMA, INC., an Oregon
corporation ("Parent"); ELK ACQUISITION, INC., a
Delaware corporation and a
wholly owned subsidiary of Parent ("Acquisition Sub"); and
EXEGENICS INC., a
Delaware corporation (the "Company"). Certain capitalized terms used in this
Agreement are defined in Annex I.
RECITALS
A. The boards of directors of Parent, Acquisition Sub and the Company
have determined that it is in the best interests of their respective
stockholders to effectuate a business combination upon the terms and subject to
the conditions set forth in this Agreement.
B. In furtherance of the contemplated business combination involving
Parent, Acquisition Sub and the Company, it is proposed: (a) that Acquisition
Sub make an exchange offer in which (i) each of the issued and outstanding
shares of Company Common Stock (together with any associated Rights) may be
exchanged for a fraction of a share of Parent Common Stock equal to the Common
Exchange Ratio, upon the terms and subject to the conditions set forth in this
Agreement, and (ii) each of the issued and outstanding shares of Company
Preferred Stock may be exchanged for a fraction of a share of Parent Common
Stock equal to the Preferred Exchange Ratio, upon the terms and subject to the
conditions set forth in this Agreement (such exchange offer, as it may be
amended from time to time, being referred to in this Agreement as the "Offer");
and (b) that, after acquiring shares of Company Capital Stock pursuant to the
Offer, Acquisition Sub merge with and into the Company upon the terms and
subject to the conditions set forth in this Agreement (the merger of Acquisition
Sub with and into the Company being referred to in this Agreement as the
"Merger").
C. The board of directors of the Company has: (i) unanimously
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of the
holders of Company Common Stock and Company Preferred Stock; and (ii)
unanimously resolved to recommend that the stockholders of the Company accept
the Offer, tender their shares of Company Capital Stock pursuant to the Offer
and (if required by applicable law in order to consummate the Merger) adopt this
Agreement.
D. In order to induce Parent and Acquisition Sub to enter into this
Agreement and to consummate the transactions contemplated hereby, concurrently
with the execution and delivery of this Agreement, certain stockholders of the
Company are executing Stockholder Agreements in favor of Parent and Acquisition
Sub (the "Stockholder Agreements").
1.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. THE OFFER
1.1 CONDUCT OF THE OFFER.
(a) Parent shall use commercially reasonable efforts
to cause Acquisition Sub to commence (within the meaning of Rule 14d-2 under the
Exchange Act) the Offer within six business days after the date of this
Agreement); provided, however, that Acquisition Sub shall not be required to
commence the Offer if (i) any of the conditions set forth in clauses "(a),"
"(b)," "(c)," "(i)," "(j)," "(k)," "(l)," "(m)," "(n)" or "(o)" of Annex II
shall not have been satisfied, or (ii) an event shall have occurred or a
circumstance shall exist that, in the reasonable judgment of Parent, would make
any of the conditions set forth in Annex II incapable of being satisfied prior
to the expiration date of the Offer.
(b) The obligation of Acquisition Sub to accept for
exchange, and to exchange or deliver any consideration for, any shares of
Company Capital Stock validly tendered (and not withdrawn) pursuant to the Offer
shall be subject to (i) the condition that there shall be validly tendered (and
not withdrawn) a number of shares of Company Capital Stock that, together with
any shares of Company Common Stock owned by Parent or Acquisition Sub
immediately prior to the acceptance for exchange of shares of Company Capital
Stock pursuant to the Offer, represents more than 50% of the Adjusted
Outstanding Share Number (the "Minimum Condition") and (ii) the other conditions
set forth in Annex II. (The Minimum Condition and the other conditions set forth
in Annex II are referred to collectively in this Agreement as the "Offer
Conditions.") Acquisition Sub expressly reserves the right, in its sole
discretion, to increase the Common Exchange Ratio or the Preferred Exchange
Ratio and to waive or make any other changes to the terms and conditions of the
Offer; provided, however, that without the prior written consent of the Company:
(i) the Minimum Condition may not be amended or waived; and (ii) no change may
be made to the Offer that (A) changes the form of consideration to be delivered
pursuant to the Offer, (B) decreases the Common Exchange Ratio or the Preferred
Exchange Ratio or the number of shares of Company Capital Stock sought to be
purchased in the Offer, (C) imposes conditions to the Offer in addition to the
Offer Conditions or modifies any Offer Condition in a manner that makes
satisfaction of such Offer Condition materially more difficult, or (D) except as
provided in Section 1.1(c), extends the expiration date of the Offer beyond the
initial expiration date of the Offer. Subject to the terms and conditions of the
Offer and this Agreement, Acquisition Sub shall accept for exchange all shares
of Company Capital Stock validly tendered (and not withdrawn) pursuant to the
Offer as soon as practicable after Acquisition Sub is permitted to do so under
applicable Legal Requirements.
(c) The Offer shall initially be scheduled to expire
20 business days following the date of the commencement thereof, as calculated
in accordance with Rules 14d-1(g)(3) and 14e-1(a) under the Exchange Act (the
"Initial Expiration Date"); provided, however, that if (i) all of the Offer
Conditions other than the Minimum Condition are satisfied as of the Initial
Expiration Date, (ii) a number of shares of Company Common Stock have been
validly tendered (and not withdrawn) pursuant to the Offer as of the Initial
Expiration Date that
2.
represents at least 35% of the sum of (y) the aggregate number of shares of
Company Common Stock outstanding as of the Initial Expiration Date, plus (z) the
number of shares of Company Common Stock issuable upon the exercise of
outstanding in-the-money options, warrants and other rights to acquire Company
Common Stock, and (iii) a number of shares of Company Preferred Stock have been
validly tendered (and not withdrawn) pursuant to the Offer as of the Initial
Expiration Date that represents at least 35% of the sum of the aggregate number
of shares of Company Preferred Stock outstanding as of the Initial Expiration
Date, then Acquisition Sub shall extend the Offer for an additional period of
ten business days. Notwithstanding anything to the contrary contained in this
Agreement, but subject to the parties' respective termination rights under
Section 8.1: (i) if, on any date as of which the Offer is scheduled to expire,
any Offer Condition has not been satisfied or waived, Acquisition Sub may, in
its discretion (and without the consent of the Company or any other Person),
extend the Offer from time to time for such period of time as Acquisition Sub
reasonably determines to be necessary to permit such Offer Condition to be
satisfied; (ii) Acquisition Sub may, in its discretion (and without the consent
of the Company or any other Person), extend the Offer from time to time for any
period required by any rule or regulation of the SEC applicable to the Offer;
(iii) if on any date as of which the Offer is scheduled to expire, the Minimum
Condition has been satisfied but either (A) the sum of the number of shares of
Company Common Stock that have been validly tendered (and not withdrawn)
pursuant to the Offer and the number of shares of Company Common Stock owned by
Parent or Acquisition Sub is less than 90% of the number of shares of Company
Common Stock outstanding, or (B) the sum of the number of shares of Company
Preferred Stock that have been validly tendered (and not withdrawn) pursuant to
the Offer and the number of shares of Company Preferred Stock owned by Parent or
Acquisition Sub is less than 90% of the number of shares of Company Preferred
Stock outstanding, then Acquisition Sub may, in its discretion (and without the
consent of the Company or any other Person), extend the Offer for an additional
period of not more than 20 business days; and (iv) Acquisition Sub may, in its
discretion (and without the consent of the Company or any other Person), elect
to provide for a subsequent offering period (and one or more extensions thereof)
pursuant to, and in accordance with the terms of, Rule 14d-11 under the Exchange
Act. No fractional shares of Parent Common Stock shall be issued in connection
with the exchange of Parent Common Stock for shares of Company Capital Stock
pursuant to the Offer, and no certificates or scrip for any such fractional
shares shall be issued. Any holder of Company Capital Stock who would otherwise
be entitled to receive a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock that otherwise would be
received by such stockholder) in the Offer shall, in lieu of such fraction of a
share of Parent Common Stock, 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 Parent Common Stock on The Nasdaq National
Market on the Acceptance Date.
(d) Parent shall use commercially reasonable efforts
to prepare and file with the SEC within six business days after the date of this
Agreement, a registration statement on Form S-4 to register the offer and sale
of Parent Common Stock pursuant to the Offer (the "Registration Statement"). The
Registration Statement will include a preliminary prospectus containing the
information required under Rule 14d-4(b) promulgated under the Exchange Act (the
"Preliminary Prospectus"). On the date of commencement of the Offer, Parent and
Acquisition Sub shall (i) file with the SEC a Tender Offer Statement on Schedule
TO with
3.
respect to the Offer, which will contain or incorporate by reference the
Preliminary Prospectus and the form of the related letter of transmittal (such
Tender Offer Statement on Schedule TO and all exhibits, amendments and
supplements thereto being referred to collectively in this Agreement as the
"Offer Documents") and (ii) cause the Offer Documents to be disseminated to
holders of shares of Company Capital Stock. Parent and Acquisition Sub shall use
commercially reasonable efforts to cause the Registration Statement and the
Offer Documents to comply in all material respects with applicable federal
securities laws and to have the Registration Statement declared effective under
the Securities Act as promptly as practicable after it is filed with the SEC. To
the extent required by applicable federal securities laws, (i) each of Parent,
Acquisition Sub and the Company shall use commercially reasonable efforts to
respond promptly to any comments of the SEC or its staff with respect to the
Registration Statement, the Offer Documents or the Offer, (ii) to correct
promptly any information provided by it for use in the Registration Statement or
the Offer Documents if such information shall have become false or misleading in
any material respect, and (iii) to take all steps necessary to cause the
Registration Statement and the Offer Documents, as supplemented or amended to
correct such information, to be filed with the SEC and to be disseminated to the
stockholders of the Company. The Company shall promptly furnish to Parent and
Acquisition Sub all information concerning the Company and the stockholders of
the Company that may be required or reasonably requested in connection with any
action contemplated by this Section 1.1(d).
(e) If, between the date of this Agreement and the
date on which any particular share of Company Capital Stock is accepted for
exchange and exchanged pursuant to the Offer, the issued and outstanding shares
of Company Common Stock, Company Preferred Stock or Parent Common Stock are
changed into a different number or class of shares by reason of any stock split,
division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction, then the Common Exchange Ratio or the Preferred Exchange Ratio (or,
if appropriate, both the Common Exchange Ratio and the Preferred Exchange Ratio)
shall be appropriately adjusted.
1.2 COMPANY ACTIONS.
(a) The Company consents to the Offer and represents
that the Company's board of directors, at a meeting duly called and held, has by
the unanimous vote of all directors of the Company (i) determined that this
Agreement and the transactions contemplated by this Agreement, including the
Offer and the Merger, are fair to and in the best interests of the holders of
Company Common Stock and the holders of Company Preferred Stock, (ii) approved
this Agreement and the transactions contemplated by this Agreement, including
the Offer and the Merger, in accordance with the requirements of the DGCL, (iii)
declared that this Agreement is advisable, (iv) resolved to recommend that the
stockholders of the Company accept the Offer and tender their shares of Company
Capital Stock pursuant to the Offer and (if required by applicable law in order
to consummate the Merger) adopt this Agreement (the recommendation of the
Company's board of directors that the stockholders of the Company accept the
Offer and tender their shares of Company Capital Stock pursuant to the Offer and
(if required by applicable law in order to consummate the Merger) adopt this
Agreement being referred to as the "Company Board Recommendation"), and (v) to
the extent necessary, adopted a resolution for the purpose and having the effect
of causing the Company not to be subject to any state takeover law or similar
Legal Requirement that might otherwise apply
4.
to the Offer, the Merger, any of the Stockholder Agreements or any of the other
transactions contemplated by this Agreement or any of the Stockholder
Agreements. Subject to Section 1.2(b): (1) the Company consents to the inclusion
of the Company Board Recommendation in the Offer Documents; and (2) the Company
Board Recommendation shall not be withdrawn or modified in a manner adverse to
Parent or Acquisition Sub, and no resolution or proposal by the board of
directors of the Company or any committee thereof to withdraw the Company Board
Recommendation or to modify the Company Board Recommendation in a manner adverse
to Parent or Acquisition Sub shall be adopted or announced (it being understood
that the Company Board Recommendation shall be deemed to have been modified in a
manner adverse to Parent if the Company Board Recommendation is no longer
unanimous).
(b) Notwithstanding anything to the contrary
contained in Section 1.2(a), at any time prior to the Acceptance Date, the
Company Board Recommendation may be withdrawn or modified in a manner adverse to
Parent and Acquisition Sub if: (i) an unsolicited, bona fide written offer by a
third party unaffiliated with the Company to acquire (by way of merger, tender
offer or otherwise) all of the outstanding shares of Company Capital Stock or
all or substantially all of the assets of the Company is made and is not
withdrawn; (ii) the Company provides Parent with at least three business days'
prior notice of any meeting of the Company's board of directors or any committee
thereof at which the board of directors or such committee will consider or
determine whether such offer is a Superior Offer; (iii) the Company's board of
directors determines in good faith (based upon a written opinion of Petkevich &
Partners LLC ("Petkevich") or another independent financial advisor of at least
reasonably equivalent reputation) that such offer constitutes a Superior Offer;
(iv) the Company's board of directors determines in good faith, after having
taken into account the advice of the Company's outside legal counsel, that, in
light of such Superior Offer, the withdrawal of the Company Board Recommendation
or the modification of the Company Board Recommendation in a manner adverse to
Parent or Acquisition Sub is required in order for the Company's board of
directors to comply with its fiduciary obligations to the stockholders of the
Company under applicable Legal Requirements; (v) the Company Board
Recommendation is not withdrawn or modified in a manner adverse to Parent or
Acquisition Sub at any time within three business days after Parent receives
written notice from the Company confirming that the Company's board of directors
has determined that such offer is a Superior Offer; and (vi) neither the Company
nor any of its Representatives shall have breached or taken any action
inconsistent with any of the provisions set forth in Section 5.3.
(c) On the date of commencement of the Offer, the
Company shall file with the SEC and (following or contemporaneously with the
dissemination of the Offer Documents) disseminate to holders of shares of
Company Capital Stock a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "Schedule 14D-9") that
(i) subject only to Section 1.2(b), shall reflect the Company Board
Recommendation and (ii) shall include the opinion of Petkevich referred to in
Section 3.27. The Company shall cause the Schedule 14D-9 to comply in all
material respects with the Exchange Act and the rules and regulations thereunder
and other applicable Legal Requirements. To the extent required by applicable
federal securities laws, (1) each of Parent, Acquisition Sub and the Company
shall promptly correct any information provided by it for use in the Schedule
14D-9 if such information shall have become false or misleading in any material
5.
respect, and (2) the Company shall take all steps necessary to cause the
Schedule 14D-9 as supplemented or amended to correct such information to be
filed with the SEC and to be disseminated to the stockholders of the Company.
The Company shall (I) give Parent and its counsel reasonable opportunity to
review and comment on the Schedule 14D-9 (including any amendment thereto) prior
to the filing thereof with the SEC, and (II) provide Parent and its counsel with
any comments the Company or its counsel may receive from the SEC or its staff
with respect to the Schedule 14D-9 promptly after receipt of such comments.
(d) The Company shall (i) promptly furnish Parent
with an accurate and complete list of the stockholders of the Company as of the
most recent practicable date, mailing labels for such stockholders and an
accurate and complete copy of the most recent available listing or computer file
containing the names and addresses of all record holders of shares of Company
Capital Stock and lists of securities positions of shares of Company Capital
Stock held in stock depositories, and (ii) provide to Parent such additional
information (including updated lists of stockholders, mailing labels for such
stockholders and lists of securities positions) and such other assistance as
Parent may reasonably request in connection with the Offer and the Merger.
Except as required by applicable Legal Requirements or legal process, and except
as necessary to disseminate the Offer Documents, Parent and Acquisition Sub
shall hold in confidence the information contained in any such listings and
files.
1.3 DIRECTORS.
(a) Effective as of the Acceptance Date, Parent shall
be entitled to designate to serve on the Company's board of directors the number
of directors, rounded up to the next whole number, determined by multiplying (i)
the total number of directors on the Company's board of directors (giving effect
to the election of any additional directors pursuant to this Section) by (ii) a
fraction having a numerator equal to the aggregate number of shares of Company
Capital Stock then beneficially owned by Parent or Acquisition Sub (including
all shares of Company Capital Stock accepted for exchange pursuant to the Offer)
and having a denominator equal to the total number of shares of Company Capital
Stock then issued and outstanding. At Parent's request on or after the
Acceptance Date, the Company shall take all actions (including, to the extent
necessary, obtaining resignations of incumbent directors and increasing the
number of authorized directors) necessary to cause Parent's designees to be
elected or appointed to the Company's board of directors. In connection with the
designation by Parent of individuals to serve on the Company's board of
directors, the Company shall (A) obtain and deliver to Parent the resignation of
each officer of the Company and (B) with respect to each committee of the
Company's board of directors, cause individuals designated by Parent to
constitute the number of members thereof, rounded up to the next whole number,
that represents at least the same percentage as individuals designated by Parent
represent on the Company's board of directors. Notwithstanding the provisions of
this Section 1.3, the Company shall use its commercially reasonable efforts to
ensure that, at all times prior to the Effective Time (as defined in Section
2.3), at least two of the members of the Company's board of directors are
individuals who were directors of the Company on the date of this Agreement (the
"Continuing Directors"); provided, however, that (x) if at any time prior to the
Effective Time there shall be only one Continuing Director serving as a director
of the Company for any reason, then the Company's board of directors shall cause
an individual selected by the remaining Continuing Director to be designated to
serve on the Company's board of directors (and such
6.
individual shall be deemed to be a Continuing Director for all purposes under
this Agreement), and (y) if at any time prior to the Effective Time no
Continuing Directors then remain, then the Company's board of directors shall
designate two individuals to serve on the Company's board of directors who are
not officers, employees or affiliates of the Company, Parent or Acquisition Sub
(and such individuals shall be deemed to be Continuing Directors for all
purposes under this Agreement).
(b) The Company's obligation to appoint Parent's
designees to the Company's board of directors shall be subject to Section 14(f)
of the Exchange Act and Rule 14f-1 thereunder. The Company shall promptly take
all actions, and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors, as Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder require in order to fulfill the Company's
obligations under this Section 1.3, so long as Parent shall have provided to the
Company on a timely basis the information with respect to Parent and its
nominees, officers, directors and affiliates required by Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder. The provisions of this Section 1.3 are
in addition to, and shall not limit, any right that Acquisition Sub, Parent or
any affiliate of Acquisition Sub or Parent may have (with respect to the
election of directors or otherwise) under applicable Legal Requirements as a
holder or beneficial owner of shares of Company Capital Stock.
(c) Following the election or appointment of Parent's
designees pursuant to Section 1.3(a) and until the Effective Time, the approval
of a majority of the Continuing Directors shall be required to authorize any
Adverse Action (as defined below). For purposes of this Section 1.3(c), "Adverse
Action" shall mean any of the following actions of the Company, to the extent
the action in question could reasonably be expected to affect adversely the
holders of shares of Company Capital Stock (other than Parent or Acquisition
Sub): (i) any amendment or waiver by the Company of any term or condition of
this Agreement; (ii) any termination of this Agreement by the Company; or (iii)
any extension by the Company of the time for the performance by Parent or
Acquisition Sub of any obligation or action under this Agreement. The approval
by a majority of the Continuing Directors of any Adverse Action shall constitute
the valid authorization of the Company's board of directors with respect to such
Adverse Action, and no other action on the part of the Company or by any other
director of the Company shall be required to authorize such Adverse Action.
1.4 COMMON TOP-UP OPTION.
(a) The Company grants to Parent and Acquisition Sub
an irrevocable option (the "Common Top-Up Option") to purchase, in exchange for
shares of Parent Common Stock or cash and a promissory note as set forth in
Section 1.4(b), the number of shares of Company Common Stock equal to the lesser
of (i) the number of shares of Company Common Stock that, when added to the
number of shares of Company Common Stock owned by Parent or Acquisition Sub at
the time of exercise of the Common Top-Up Option, constitutes 90.1% of the
number of shares of Company Common Stock that would be outstanding immediately
after the issuance of all shares of Company Common Stock subject to the Common
Top-Up Option or (ii) the aggregate number of shares of Company Common Stock
that are authorized but are not issued and outstanding at the time of exercise
of the Common Top-Up Option.
7.
(b) The Common Top-Up Option may be exercised by
Parent or Acquisition Sub, in whole or in part, at any time on or after the
Acceptance Date. The number of shares of Parent Common Stock to be issued and
delivered to the Company as consideration for the shares of Company Common Stock
being purchased pursuant to the Common Top-Up Option shall be determined by
multiplying (i) the number of shares of Company Common Stock being purchased
pursuant to the Common Top-Up Option by (ii) the Common Exchange Ratio, and
rounding up to the next whole share. In lieu of issuing and delivering shares of
Parent Common Stock to the Company as consideration for the shares of Company
Common Stock being purchased pursuant to the Common Top-Up Option, Parent may
make payment for such shares by (i) making a cash payment to the Company of the
aggregate par value of such shares and (ii) delivery to the Company of a
promissory note having a principal amount determined by subtracting the
aggregate par value of such shares from the product of (A) the number of shares
of Parent Common Stock that Parent otherwise would have been required to issue
and deliver to the Company in exchange for such shares of Company Common Stock
and (B) the closing price of a share of Parent Common Stock on The Nasdaq
National Market on the trading day immediately preceding the date on which such
promissory note is executed and delivered. Any such promissory note shall bear
interest at the rate of 3% per annum and shall mature on the first anniversary
of the date of execution and delivery of such promissory note.
(c) In the event Parent or Acquisition Sub wishes to
exercise the Common Top-Up Option, Parent shall deliver to the Company a notice
setting forth (i) the number of shares of Company Common Stock that Parent or
Acquisition Sub intends to purchase pursuant to the Common Top-Up Option, (ii)
whether Parent intends to issue shares of Parent Common Stock or to pay cash and
execute and deliver a promissory note as consideration for such shares of
Company Common Stock in accordance with Section 1.4(b) and (iii) a place and
time for the closing of the purchase of such shares of Company Common Stock. At
the closing of the purchase of such shares of Company Common Stock, Parent shall
cause to be delivered to the Company the consideration required to be delivered
in exchange for such shares of Company Common Stock, and the Company shall cause
to be issued to Parent or Acquisition Sub a certificate representing the shares
of Company Common Stock purchased pursuant to the Common Top-Up Option.
1.5 PREFERRED TOP-UP OPTION.
(a) The Company grants to Parent and Acquisition Sub
an irrevocable option (the "Preferred Top-Up Option") to purchase, in exchange
for shares of Parent Common Stock or a promissory note as set forth in Section
1.5(b), the number of shares of Company Preferred Stock equal to the lesser of
(i) the number of shares of Company Preferred Stock that, when added to the
number of shares of Company Preferred Stock owned by Parent or Acquisition Sub
at the time of exercise of the Preferred Top-Up Option, constitutes 90.1% of the
number of shares of Company Preferred Stock that would be outstanding
immediately after the issuance of all shares of Company Preferred Stock subject
to the Preferred Top-Up Option or (ii) the aggregate number of shares of Company
Preferred Stock that are authorized but are not issued and outstanding at the
time of exercise of the Preferred Top-Up Option.
(b) The Preferred Top-Up Option may be exercised by
Parent or Acquisition Sub, in whole or in part, at any time on or after the
Acceptance Date. The number of
8.
shares of Parent Common Stock to be issued and delivered to the Company as
consideration for the shares of Company Preferred Stock being purchased pursuant
to the Preferred Top-Up Option shall be determined by multiplying (i) the number
of shares of Company Preferred Stock being purchased pursuant to the Preferred
Top-Up Option by (ii) the Preferred Exchange Ratio, and rounding up to the next
whole share. In lieu of issuing and delivering shares of Parent Common Stock to
the Company as consideration for the shares of Company Preferred Stock being
purchased pursuant to the Preferred Top-Up Option, Parent may make payment for
such shares by (i) making a cash payment to the Company of the aggregate par
value of such shares and (ii) delivery to the Company of a promissory note
having a principal amount determined by subtracting the aggregate par value of
such shares from the product of (A) the number of shares of Parent Common Stock
that Parent otherwise would have been required to issue and deliver to the
Company in exchange for such shares of Company Preferred Stock and (B) the
closing price of a share of Parent Common Stock on The Nasdaq National Market on
the trading day immediately preceding the date on which such promissory note is
executed and delivered. Any such promissory note shall bear interest at the rate
of 3% per annum and shall mature on the first anniversary of the date of
execution and delivery of such promissory note.
(c) In the event Parent or Acquisition Sub wishes to
exercise the Preferred Top-Up Option, Parent shall deliver to the Company a
notice setting forth (i) the number of shares of Company Preferred Stock that
Parent or Acquisition Sub intends to purchase pursuant to the Preferred Top-Up
Option, (ii) whether Parent intends to issue shares of Parent Common Stock or to
pay cash and execute and deliver a promissory note as consideration for such
shares of Company Preferred Stock in accordance with Section 1.5(b) and (iii) a
place and time for the closing of the purchase of such shares of Company
Preferred Stock. At the closing of the purchase of such shares of Company
Preferred Stock, Parent shall cause to be delivered to the Company the
consideration required to be delivered in exchange for such shares of Company
Preferred Stock, and the Company shall cause to be issued to Parent or
Acquisition Sub a certificate representing the shares of Company Preferred Stock
purchased pursuant to the Preferred Top-Up Option.
SECTION 2. MERGER TRANSACTION
2.1 MERGER OF ACQUISITION SUB INTO THE COMPANY. Upon the terms
and subject to the conditions set forth in this Agreement, at the Effective
Time, Acquisition Sub shall be merged with and into the Company, and the
separate existence of Acquisition Sub shall cease. The Company will continue as
the surviving corporation in the Merger (the "Surviving Corporation").
2.2 EFFECT OF THE MERGER. The Merger shall have the effects
set forth in this Agreement and in the applicable provisions of the DGCL.
2.3 CLOSING; EFFECTIVE TIME. The consummation of the Merger
(the "Closing") shall take place at the offices of Xxxxxx Godward LLP, 0000
Xxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx, at 10:00 a.m. on a date to be designated
by Parent (the "Closing Date"), which shall be no later than the third business
day after the satisfaction or waiver of the last to be satisfied or waived of
the conditions set forth in Section 7 (other than delivery of items to be
delivered at the Closing and other than those conditions that by their nature
are to be satisfied at
9.
the Closing, it being understood that the occurrence of the Closing shall remain
subject to the delivery of such items and the satisfaction or waiver of such
conditions at the Closing). Subject to the provisions of this Agreement, a
certificate of merger satisfying the applicable requirements of the DGCL shall
be duly executed by the Company and, concurrently with or as soon as practicable
following the Closing, delivered to the Secretary of State of the State of
Delaware for filing. The Merger shall become effective upon the date and time of
the filing of such certificate of merger with the Secretary of State of the
State of
Delaware (the "Effective Time").
2.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND
OFFICERS. Unless otherwise determined by Parent prior to the Effective Time:
(a) the Certificate of Incorporation of the Surviving
Corporation shall be amended and restated as of the Effective
Time to conform to Exhibit A;
(b) the Bylaws of the Surviving Corporation shall be
amended and restated as of the Effective Time to conform to
the Bylaws of Acquisition Sub as in effect immediately prior
to the Effective Time; and
(c) the directors and officers of the Surviving
Corporation immediately after the Effective Time shall be the
respective individuals who are directors and officers of
Acquisition Sub immediately prior to the Effective Time.
2.5 CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger
and without any further action on the part of Parent, Acquisition Sub, the
Company or any stockholder of the Company:
(i) any shares of Company Capital Stock then held by
the Company or held in the Company's treasury (together with
any associated Rights) shall be canceled and retired and shall
cease to exist, and no consideration shall be delivered in
exchange therefor;
(ii) any shares of Company Capital Stock then held by
Parent, Acquisition Sub or any other wholly owned Subsidiary
of Parent (together with any associated Rights) shall be
canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor;
(iii) except as provided in clauses "(i)" and "(ii)"
above and subject to Sections 2.5(b), 2.5(c), 2.5(d) and 2.7,
each share of Company Common Stock then issued and outstanding
(together with any associated Rights) shall be converted into
the right to receive a fraction of a share of Parent Common
Stock equal to the Common Exchange Ratio;
(iv) except as provided in clauses "(i)" and "(ii)"
above and subject to Sections 2.5(b), 2.5(c), 2.5(d) and 2.7,
each share of Company Preferred Stock
10.
then issued and outstanding shall be converted into the right
to receive a fraction of a share of Parent Common Stock equal
to the Preferred Exchange Ratio; and
(v) each share of the common stock, $0.01 par value
per share, of Acquisition Sub then issued and outstanding
shall be converted into the number of shares of common stock
of the Surviving Corporation determined by dividing (A) the
number of shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time by (B)
100.
(b) If, between the date of this Agreement and the
Effective Time, the issued and outstanding shares of Company Common Stock,
Company Preferred Stock or Parent Common Stock are changed into a different
number or class of shares by reason of any stock split, division or subdivision
of shares, stock dividend, reverse stock split, consolidation of shares,
reclassification, recapitalization or other similar transaction, then the Common
Exchange Ratio or the Preferred Exchange Ratio (or, if appropriate, both the
Common Exchange Ratio and the Preferred Exchange Ratio) shall be appropriately
adjusted.
(c) If any shares of Company Capital Stock issued and
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with the
Company or under which the Company has any rights, then the Company shall ensure
that: (i) the shares of Parent Common Stock issuable with respect thereto will
also be unvested or subject to the same repurchase option, risk of forfeiture or
other condition; and (ii) from and after the Effective Time, Parent is entitled
to exercise any such repurchase option or any similar right as the Company's
assignee.
(d) No fractional shares of Parent 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 Company Capital Stock who
would otherwise be entitled to receive a fraction of a share of Parent Common
Stock (after aggregating all fractional shares of Parent Common Stock issuable
to such holder) shall, in lieu of such fraction of a share and upon surrender of
such holder's Company Stock Certificate(s) (as defined in Section 2.6(b)), 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 Parent Common Stock on The Nasdaq National Market on the date on which
the Merger becomes effective.
2.6 SURRENDER OF CERTIFICATES; STOCK TRANSFER BOOKS.
(a) Prior to the Effective Time, Parent shall select
a reputable bank or trust company to act as exchange agent in the Merger (the
"Exchange Agent"). As soon as practicable after the Effective Time, Parent shall
deposit with the Exchange Agent (i) certificates representing the shares of
Parent Common Stock issuable pursuant to this Section 2, and (ii) cash
sufficient to make payments in lieu of fractional shares in accordance with
Section 2.5(d). The shares of Parent 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."
11.
(b) At the Effective Time: (a) all shares of Company
Capital Stock issued and outstanding immediately prior to the Effective Time
shall automatically be canceled and retired and shall cease to exist, and all
holders of certificates representing shares of Company Capital Stock that were
issued and outstanding immediately prior to the Effective Time shall cease to
have any rights as stockholders of the Company; and (b) the stock transfer books
of the Company shall be closed with respect to all shares of Company Capital
Stock issued and outstanding immediately prior to the Effective Time. No further
transfer of any such shares of Company 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 Company Capital Stock (a
"Company Stock Certificate") is presented to the Exchange Agent or to the
Surviving Corporation or Parent, such Company Stock Certificate shall be
canceled and shall be exchanged as provided in this Section 2.6.
(c) As soon as reasonably practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to the record
holders of Company Capital Stock entitled to receive Parent Common Stock
pursuant to Sections 2.5(a)(iii) and (iv) (i) a letter of transmittal in
customary form and containing such provisions as Parent may reasonably specify
(including a provision confirming that delivery of the Company Stock
Certificates shall be effected, and risk of loss and title to Company Stock
Certificates shall pass, only upon delivery of such Company Stock Certificates
to the Exchange Agent), and (ii) instructions for use in effecting the surrender
of Company Stock Certificates in exchange for certificates representing Parent
Common Stock (and cash in lieu of any fractional share of Parent Common Stock).
Upon surrender of a Company 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 or Parent, (1) the
holder of such Company Stock Certificate shall be entitled to receive, in
exchange for each share of Company Capital Stock previously represented by such
Company Stock Certificate, a certificate representing the number of whole shares
of Parent Common Stock that such holder has the right to receive pursuant to the
provisions of Section 2.5 (and cash in lieu of any fractional share of Parent
Common Stock), and (2) the Company Stock Certificate so surrendered shall be
canceled. Until surrendered as contemplated by this Section 2.6(c), each Company
Stock Certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive the shares of Parent Common Stock with
respect to each share of Company Capital Stock represented by such Company Stock
Certificate (and cash in lieu of any fractional share of Parent Common Stock).
If any Company Stock Certificate shall have been lost, stolen or destroyed,
Parent may, in its discretion and as a condition precedent to the issuance of
any certificate representing Parent Common Stock, require the owner of such
lost, stolen or destroyed Company Stock Certificate to provide an appropriate
affidavit and to deliver a bond (in such sum as Parent may reasonably direct as
indemnity against any claim that may be made against the Exchange Agent, Parent
or the Surviving Corporation with respect to such Company Stock Certificate).
(d) No dividends or other distributions declared or
made with respect to Parent Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Company Stock Certificate
with respect to the shares of Parent Common Stock that such holder has the right
to receive in the Merger until such holder surrenders such Company Stock
Certificate in accordance with this Section 2.6 (at which time such holder shall
12.
be entitled, subject to the effect of applicable escheat or similar laws, to
receive all such dividends and distributions, without interest).
(e) Any portion of the Exchange Fund that remains
undistributed to holders of Company Stock Certificates as of the date 180 days
after the date on which the Merger becomes effective shall be delivered to
Parent upon demand, and any holder of a Company Stock Certificate that has not
theretofore surrendered its Company Stock Certificate in accordance with this
Section 2.6 shall thereafter look only to Parent as a general creditor of Parent
for satisfaction of such holder's claim for Parent Common Stock, cash in lieu of
fractional shares of Parent Common Stock and any dividends or distributions with
respect to Parent Common Stock.
(f) Each of the Exchange Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Code or any provision of state,
local or foreign tax law or under any other applicable Legal Requirement. To the
extent such amounts are so deducted or withheld, 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.
(g) Neither Parent nor the Surviving Corporation
shall be liable to any holder or former holder of Company Capital Stock or to
any other Person with respect to any shares of Parent Common Stock (or dividends
or distributions with respect thereto), or for any cash amount, that is
delivered to any public official pursuant to any applicable abandoned property
law, escheat law or similar Legal Requirement. If any Company Stock Certificate
has not been surrendered by the earlier of (i) the fifth anniversary of the date
on which the Merger becomes effective or (ii) the date immediately prior to the
date on which any shares of Parent Common Stock (or dividends or distributions
with respect thereto, or cash in lieu of a fractional share) that such Company
Stock Certificate represents the right to receive would otherwise escheat to or
become the property of any Governmental Body, then such shares of Parent Common
Stock (or dividends or distributions with respect thereto, or cash in lieu of a
fractional share) shall, to the extent permitted by applicable Legal
Requirements, become the property of the Surviving Corporation, free and clear
of any claim or interest of any Person previously entitled thereto.
2.7 SHARES SUBJECT TO APPRAISAL RIGHTS.
(a) Notwithstanding anything to the contrary
contained in this Agreement, any share of Company Capital Stock that, as of the
Effective Time, is held by a holder who has preserved appraisal rights under
Section 262 of the DGCL with respect to such share shall not be converted into
or represent the right to receive Parent Common Stock in accordance with Section
2.5(a)(iii) or Section 2.5(a)(iv) (or cash in lieu of any fractional share of
Parent Common Stock in accordance with Section 2.5(d)), and the holder of such
share shall be entitled only to such rights with respect to such share as may be
granted to such holder pursuant to Section 262 of the DGCL; provided, however,
that if such appraisal rights shall not be perfected or the holder of such share
shall otherwise lose such holder's appraisal rights with
13.
respect to such share, then, as of the later of the Effective Time or the time
of the failure to perfect or the loss of such rights, such share shall
automatically be converted into and shall represent only the right to receive
(upon the surrender of the certificate representing such share) Parent Common
Stock in accordance with Section 2.5(a)(iii) or Section 2.5(a)(iv) (and cash in
lieu of any fractional share of Parent Common Stock in accordance with Section
2.5(d)).
(b) The Company shall give Parent (i) prompt notice
of any written demand received by the Company prior to the Effective Time to
require the Company to purchase shares of Company Capital Stock pursuant to
Section 262 of the DGCL and of any other demand, notice or instrument delivered
to the Company prior to the Effective Time pursuant to the DGCL, and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
any such demand, notice or instrument. The Company shall not make any payment or
settlement offer prior to the Effective Time with respect to any such demand
unless Parent shall have consented in writing to such payment or settlement
offer.
2.8 FURTHER ACTION. If, at any time after the Effective Time,
any further action is determined by Parent 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
Acquisition Sub and the Company, the officers and directors of the Surviving
Corporation and Parent shall be fully authorized (in the name of Acquisition
Sub, in the name of the Company and otherwise) to take such action.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Acquisition Sub as
follows:
3.1 SUBSIDIARIES; DUE ORGANIZATION; ETC.
(a) The Company has no Subsidiaries, and the Company
does not own any capital stock of, or any equity interest of any nature in, any
other Entity, other than the Entities identified in Part 3.1 of the Company
Disclosure Schedule (except where such ownership has not resulted in the
imposition on or incurrence by the Company, and could not reasonably be expected
to result in the imposition on or incurrence by the Company, Parent, the
Surviving Corporation or any other Subsidiary of Parent, of any Accrued
Liability or Potential Liability). The Company has not agreed and is not
obligated to make, and is not bound by any Contract under which it may become
obligated to make, any future investment in or capital contribution to any other
Entity. The Company is not liable for any of the debts or other obligations of,
any general partnership, limited partnership or other Entity.
(b) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware
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 Contracts by which it is bound.
(c) The Company 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
14.
requires such qualification except where the failure to be so qualified has not
resulted in the imposition on or incurrence by the Company, and could not
reasonably be expected to result in the imposition on or incurrence by the
Company, Parent, the Surviving Corporation or any other Subsidiary of Parent, of
any Accrued Liability or Potential Liability.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The Company has
delivered to Parent accurate and complete copies of the certificate of
incorporation and bylaws of the Company, including all amendments thereto.
3.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company
consists of: (i) 30,000,000 shares of Company Common Stock, of which 16,184,486
shares have been issued and are outstanding as of the date of this Agreement
(and of which an additional 511,200 shares are held in the Company's treasury);
and (ii) 10,000,000 shares of Company Preferred Stock, of which (A) 4,000,000
shares have been designated Series A Convertible Preferred Stock, of which
910,822 shares have been issued and are outstanding as of the date of this
Agreement and (B) 30,000 shares have been designated Series B Junior
Participating Preferred Stock, of which none are outstanding. Since December 31,
1995, 1,132,050 shares of Company Preferred Stock have been converted into
1,132,050 shares of Company Common Stock. All of the outstanding shares of
Company Capital Stock have been duly authorized and validly issued, and are
fully paid and nonassessable. Except as set forth in Part 3.3(a)(ii) of the
Company Disclosure Schedule or where the existence of any of the following (y)
has not resulted in the imposition on or incurrence by the Company, and could
not reasonably be expected to result in the imposition on or incurrence by the
Company, Parent, the Surviving Corporation or any other Subsidiary of Parent, of
any Accrued Liability or Potential Liability, and (z) has not given rise to and
could not reasonably be expected to 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 the
Company or any other claim against the Company: (i) none of the outstanding
shares of Company Capital Stock is entitled or subject to any preemptive right,
right of participation, right of maintenance or any similar right; (ii) none of
the outstanding shares of Company Capital Stock is subject to any right of first
refusal in favor of the Company; and (iii) there is no Company Contract relating
to the voting or registration of, or restricting any Person from purchasing,
selling, pledging or otherwise disposing of (or granting any option or similar
right with respect to), any shares of Company Capital Stock. The Company is not
under any obligation, and is not bound by any Contract pursuant to which it may
become obligated, to repurchase, redeem or otherwise acquire any outstanding
shares of Company Capital Stock.
(b) As of the date of this Agreement: (i) 30,000
shares of Company Preferred Stock, designated as Series B Junior Participating
Preferred Stock, are reserved for future issuance upon exercise of Rights; (ii)
94,000 shares of Company Common Stock are subject to issuance pursuant to stock
options granted and outstanding under the Company's 1992 Stock Option Plan;
(iii) 1,145,000 shares of Company Common Stock are subject to issuance pursuant
to stock options granted and outstanding under the Company's 1996 Stock Option
Plan; (iv) 1,870,655 shares of Company Common Stock are subject to issuance
pursuant to stock options granted and outstanding under the Company's 2000 Stock
Option Plan; and (v) 742,500 shares of Company Common Stock are subject to
issuance pursuant to exercise of Company
15.
Warrants. Part 3.3(b)(i) of the Company Disclosure Schedule sets forth the
following information with respect to each Company Option outstanding as of the
date of this Agreement: (i) the particular plan (if any) pursuant to which such
Company Option was granted; (ii) the name of the optionee; (iii) the number of
shares of Company Common Stock subject to such Company Option; (iv) the exercise
price of such Company Option; (v) the date on which such Company Option was
granted; (vi) the applicable vesting schedule; (vii) the extent to which such
Company Option is vested and exercisable as of the date of this Agreement;
(viii) the extent, if any, to which the vesting of any such Company Option shall
be accelerated upon the consummation of the transactions contemplated hereby;
and (ix) the date on which such Company Option expires. The Company has
delivered to Parent accurate and complete copies of all stock option plans
pursuant to which the Company has ever granted stock options, and the forms of
all stock option agreements evidencing such options. Part 3.3(b)(ii) of the
Company Disclosure Schedule sets forth the following information with respect to
each Company Warrant outstanding as of the date of this Agreement, the name of
the warrantholder and the date on which such Company Warrant was granted. The
Company has delivered to Parent accurate and complete copies of all Company
Warrants.
(c) Except as set forth in Parts 3.3(b)(i) and (ii)
of the Company 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 the Company; (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
the Company; (iii) stockholder rights plan (or similar plan commonly referred to
as a "poison pill") or Contract under which the Company is or may become
obligated to sell or otherwise issue any shares of its capital stock or any
other securities, other than the Rights Agreement; or (iv) condition or
circumstance (including the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby) that could reasonably be
expected to 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 the Company.
(d) All outstanding shares of Company Capital Stock,
Company Options, Company Warrants and other securities of the Company have been
issued and granted in compliance with (i) all applicable securities laws and
other applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts, except for any failure to so comply that (y) has not
resulted in the imposition on or incurrence by the Company, and could not
reasonably be expected to result in the imposition on or incurrence by the
Company, Parent, the Surviving Corporation or any other Subsidiary of Parent, of
any Accrued Liability or Potential Liability, and (z) has not given rise to and
could not reasonably be expected to 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 the
Company.
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has delivered or made available to
Parent via XXXXX accurate and complete copies of (i) the Company SEC Documents
and (ii) all comment letters received by the Company from the Staff of the SEC
since July 1, 2001 and all responses
16.
to such comment letters by or on behalf of the Company. Except as otherwise
disclosed in the Company SEC Documents filed with the SEC prior to July 1, 2003,
all statements, reports, schedules, forms, certifications and other documents
required to have been filed by the Company with the SEC have been so filed on a
timely basis, except where the failure to be timely filed has not resulted in
the imposition on or incurrence by the Company, and could not reasonably be
expected to result in the imposition on or incurrence by the Company, Parent,
the Surviving Corporation or any other Subsidiary of Parent, of any Accrued
Liability or Potential Liability. 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): (i) each of the Company 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 (ii) none of the Company 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 Company is eligible to register shares of Company
Common Stock on Form S-2 under the Securities Act.
(b) The Company maintains disclosure controls and
procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange Act. Such
controls and procedures are effective to ensure that all material information
concerning the Company is made known on a timely basis to the individuals
responsible for preparing the Company's filings with the SEC and other public
disclosure documents. The Company has delivered or made available to Parent
accurate and complete copies of, all written descriptions of, and all policies,
manuals and other documents promulgating, such disclosure controls and
procedures.
(c) To the best of the knowledge of the Company,
except as otherwise disclosed in the Company SEC Documents filed with the SEC
prior to July 1, 2003, since July 1, 2001, each director and executive officer
of the Company has filed with or otherwise furnished, supplied or delivered to
the SEC on a timely basis all statements required by Section 16(a) of the
Exchange Act and the rules and regulations thereunder. The Chief Executive
Officer and the Chief Financial Officer of the Company have signed, and the
Company has filed with or otherwise furnished, supplied or delivered to the SEC,
all certifications required by Section 906 of the Xxxxxxxx-Xxxxx Act of 2002,
each such certification is true and correct, and no such certification includes
any qualification or exception to any matter certified in such certification or
has been modified or withdrawn. Neither the Company nor any of its officers has
received any notice or other communication from any Governmental Body
questioning or challenging the accuracy, completeness, form or manner of filing
or submission of any such certification.
(d) The financial statements (including any related
notes) contained in the Company SEC Documents: (i) complied as to form in all
material respects with the published rules and regulations of the SEC applicable
thereto; (ii) were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered (except
as may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC, and except that the
unaudited financial statements may not contain footnotes and are subject to
normal and recurring year-end adjustments that will not, individually or in the
aggregate, be material in amount), and (iii) fairly present the financial
position of the Company as of the respective dates thereof and the results of
operations and cash flows of the Company for the periods covered thereby.
17.
(e) The Company maintains accurate books and records
reflecting its assets and liabilities and maintains proper and adequate internal
accounting controls, which provide assurance that: (i) transactions are executed
with the authorization of the management of the Company; (ii) transactions are
recorded as necessary to permit preparation of the financial statements of the
Company and to maintain accountability for the assets of the Company; (iii)
access to the assets of the Company is permitted only in accordance with the
authorization of the management of the Company; (iv) the reporting of the assets
of the Company is compared with their existing assets at regular intervals; and
(v) accounts, notes and other receivables and inventory are recorded accurately,
and proper and adequate procedures are implemented to effect the collection of
accounts, notes and other receivables on a current and timely basis.
(f) Part 3.4(f) of the Company Disclosure Schedule
sets forth an accurate and complete statement identifying (i) the aggregate
dollar amount of the cash and cash equivalents held by the Company as of June
30, 2003 and (ii) by category and month, the Company's projected cash
expenditures (including any cash expenditures that the Company has made or is
obligated to make) for each month of the period beginning July 1, 2003 and
ending November 15, 2003 (other than fees and expenses of the type identified in
Section 8.3(a) of this Agreement that are to be shared equally by the Company
and Parent, which need not be identified on a monthly basis) and each other cash
expenditure that the Company is obligated to make after the end of such period
but that is of a type that would have been required to be included in any
category set forth on such statement had the Company been obligated to make such
expenditure during such period (the "Projected Cash Disbursement Schedule").
3.5 ABSENCE OF CHANGES. Except as set forth in Part 3.5 of the
Company Disclosure Schedule, since March 31, 2003:
(a) there has not been any Material Adverse Effect,
and no event has occurred or circumstance has arisen that, in combination with
any other events or circumstances, could reasonably be expected to have or give
rise to a Material Adverse Effect;
(b) the Company has not (i) declared, accrued (other
than accruals in respect of dividends required on the Company Preferred Stock),
set aside or paid any dividend or made any other distribution in respect of any
shares of capital stock, or (ii) repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities;
(c) except as set forth in the minutes of the board
of directors of the Company or any committee of the board of directors of the
Company, in each case, that have been provided to Parent prior to the date of
this Agreement, the Company has not amended or waived any of its rights under,
or permitted the acceleration of vesting under, (i) any provision of any of the
Company's stock option plans, (ii) any provision of any Contract evidencing any
outstanding Company Option, or (iii) any restricted stock purchase agreement;
(d) there has been no amendment to the certificate of
incorporation, bylaws or other charter or organizational documents of the
Company (except for the filing of the Certificate of Designation for the
Company's Series B Junior Participating Preferred Stock filed with the Secretary
of State of the State of
Delaware on June 9, 2003), and the Company has not
18.
effected or been a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(e) the Company has not made any capital expenditure
which, when added to all other capital expenditures made on behalf of the
Company between March 31, 2003 and the date of this Agreement, exceeds $25,000
in the aggregate;
(f) the Company has not (i) acquired, leased or
licensed any material right or other material asset from any other Person, (ii)
sold or otherwise disposed of, or leased or licensed, any material right or
other material asset to any other Person, or (iii) waived or relinquished any
right, except for rights or other assets acquired, leased, licensed or disposed
of in the ordinary course of business and consistent with past practices;
(g) the Company has not made any pledge of any of its
assets or otherwise permitted any of its assets to become subject to any
Encumbrance, except for pledges of immaterial assets made in the ordinary course
of business and consistent with past practices;
(h) the Company has not incurred or guaranteed any
indebtedness for borrowed money;
(i) the Company has not (i) adopted, established or
entered into any Company Employee Plan or Company Employee Agreement, (ii)
caused or permitted any Company Employee Plan or Company Employee Agreement to
be amended in any material respect, or (iii) paid any bonus or made any
profit-sharing or similar payment to, or materially increased the amount of the
wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees;
(j) the Company has not changed any of its methods of
accounting or accounting practices in any material respect;
(k) the Company has not made any material Tax
election;
(l) the Company has not commenced or settled any
Legal Proceeding;
(m) the Company has not entered into any material
transaction or taken any other material action outside the ordinary course of
business or inconsistent with past practices; and
(n) the Company has not agreed or committed to take
any of the actions referred to in clauses "(b)" through "(m)" above.
3.6 TITLE TO ASSETS. All of the assets purportedly owned by
the Company are held by the Company free and clear of any Encumbrances, except
for (i) any lien for current taxes not yet due and payable, (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 the Company, and (iii) liens
described in Part 3.6 of the Company Disclosure Schedule.
19.
3.7 LOANS AND ADVANCES. The Company has delivered to Parent an
accurate and complete copy of each Contract providing for a loan or advance made
by the Company to any employee, director, consultant or independent contractor
(including each loan or extension of credit maintained by the Company to which
the second sentence of Section 13(k)(1) of the Exchange Act applies), other than
routine travel advances made to employees in the ordinary course of business and
loans and advances described in the Company SEC Documents filed with the SEC
prior to July 1, 2003. Since December 31, 2002, the Company has not extended or
maintained credit, arranged for the extension of credit or renewed an extension
of credit, in the form of a personal loan to or for any director or executive
officer of the Company.
3.8 LEASEHOLD. The Company does not own any real property or
any interest in real property, except for the leaseholds created under the real
property lease between the Company and Xxxxxx Bloodcare (f/k/a J.K. and Xxxxx X.
Xxxxxx Research Institute and Blood Bank), dated October 1, 1991 (as amended
prior to the date of this Agreement, the "Lease"), a complete and accurate copy
of which, as amended, has been delivered to Parent by the Company.
3.9 INTELLECTUAL PROPERTY.
(a) Neither (1) the execution, delivery or
performance of this Agreement nor (2) the acquisition of, or the issuance and
delivery of shares of Parent Common Stock in exchange for, any shares of Company
Capital Stock pursuant to the Offer or the consummation of the Merger or any of
the other transactions contemplated by this Agreement will, with or without
notice or the lapse of time, result in or give any other Person the right or
option to cause or declare: (i) a loss of, or Encumbrance on, any Company IP or
(ii) a breach of any Company Contract pursuant to which any material
Intellectual Property Right or Intellectual Property is licensed to the Company.
(b) To the best of the knowledge of the Company, no
Person has infringed, misappropriated, or otherwise violated, and no Person is
currently infringing, misappropriating or otherwise violating, any Company IP.
(c) The Company has never infringed (directly,
contributorily, by inducement or otherwise), misappropriated or otherwise
violated any Intellectual Property Right of any other Person except for any
instance of infringement that has not resulted in the imposition on or
incurrence by the Company, and could not reasonably be expected to result in the
imposition on or incurrence by the Company, Parent, the Surviving Corporation or
any other Subsidiary of Parent, of any Accrued Liability or Potential Liability.
No infringement, misappropriation or similar claim or Legal Proceeding is
pending or has been threatened against any other Person who may be entitled to
be indemnified, defended, held harmless or reimbursed by the Company with
respect to such claim or Legal Proceeding. Except as set forth in Part 3.9(c) of
the Company Disclosure Schedule, the Company 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 (other
than pursuant to the standard forms of Company IP Contracts that have been
delivered or made available to Parent).
20.
3.10 CONTRACTS.
(a) Part 3.10(a) of the Company Disclosure Schedule
identifies each Company Contract that constitutes a "Material Contract." (For
purposes of this Agreement, each of the following shall be deemed to constitute
a "Material Contract" if such Contract has created or could reasonably be
expected to give rise to an Accrued Liability or a Potential Liability):
(i) any Contract (A) relating to the
employment of, or the performance of services by, any
employee or consultant, (B) pursuant to which the
Company is or may become obligated to make any
severance, termination or similar payment to any
current or former employee or director, or (C)
pursuant to which the Company is or may become
obligated to make any bonus or similar payment (other
than payments constituting base salary) in excess of
$25,000 to any current or former employee or
director;
(ii) any Contract that, to the best of the
knowledge of the Company, provides for
indemnification of any officer, director, employee or
agent;
(iii) any Contract imposing any restriction
on the right or ability of the Company or any
affiliate of the Company (A) to compete with any
other Person, (B) to acquire any product or other
asset or any services from any other Person, (C) to
solicit, hire or retain any Person as an employee,
consultant or independent contractor, (D) to develop,
sell, supply, distribute, offer, support or service
any product or any technology or other asset to or
for any other Person, (E) to perform services for any
other Person, or (F) to transact business or deal in
any other manner with any other Person;
(iv) any Contract (other than Contracts
evidencing Company Options) that is known to the
Company (A) relating to the acquisition, issuance,
voting, registration, sale or transfer of any
securities, (B) providing any Person with any
preemptive right, right of participation, right of
maintenance or similar right with respect to any
securities, or (C) providing the Company with any
right of first refusal with respect to, or right to
repurchase or redeem, any securities;
(v) any Contract incorporating or relating
to any guaranty, any warranty or any indemnity or
similar obligation;
(vi) any Contract entered into or amended by
the Company since July 1, 2001 (A) imposing any
confidentiality obligation on the Company or (B)
containing "standstill" or similar provisions;
(vii) any Contract with any investment
banker, financial advisor or other professional
advisor;
(viii) any Contract requiring that the
Company give any notice or provide any information to
any Person prior to considering or accepting any
Acquisition Proposal or similar proposal, or prior to
entering into any discussions, agreement,
21.
arrangement or understanding relating to any
Acquisition Transaction or similar transaction;
(ix) any Contract that has a term of more
than 60 days and that may not be terminated by the
Company (without penalty) within 60 days after the
delivery of a termination notice by the Company;
(x) any Contract that contemplates or
involves the payment or delivery of cash or other
consideration in an amount or having a value in
excess of $25,000 in the aggregate, or contemplates
or involves the performance of services having a
value in excess of $25,000 in the aggregate;
(xi) any Contract that could reasonably be
expected to have a material effect on (A) the
business, condition, cash position, liquidity,
working capital, capitalization, assets, liabilities,
operations, cash flow, financial performance or
prospects of the Company or (B) the ability of the
Company to perform any of its obligations under, or
to consummate any of the transactions contemplated
by, this Agreement; and
(xii) any other Contract, if a breach of
such Contract could reasonably be expected to have a
Material Adverse Effect.)
The Company has delivered to Parent an accurate and complete copy of each
Company Contract that constitutes a Material Contract.
(b) Each Company Contract that constitutes a Material
Contract is valid and in full force and effect, and is enforceable in accordance
with its terms, 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.
(c) Except as set forth in Part 3.10(c) of the
Company Disclosure Schedule: (i) the Company has not violated or breached, or
committed any default under, any Company Contract, except for violations,
breaches and defaults that have not had and could not reasonably be expected to
have a Material Adverse Effect; and, to the best of the knowledge of the
Company, no other Person has violated or breached, or committed any default
under, any Company Contract, except for violations, breaches and defaults that
have not had and would not reasonably be expected to have a Material Adverse
Effect; (ii) to the best of the knowledge of the Company, no event has occurred,
and no circumstance or condition exists, that (with or without notice or lapse
of time) could reasonably be expected to (A) result in a violation or breach of
any of the provisions of any Company Contract, (B) give any Person the right to
declare a default or exercise any remedy under any Company Contract, (C) give
any Person the right to accelerate the maturity or performance of any Company
Contract, or (D) give any Person the right to cancel, terminate or modify any
Company Contract, except in each such case for defaults, acceleration rights,
termination rights and other rights that have not had and could not reasonably
be expected to have a Material Adverse Effect; and (iii) since July 1, 2001, the
Company has not received any notice or other communication regarding any actual
or possible violation or breach of, or default under, any Company Contract,
except in each such case for defaults, acceleration rights, termination rights
and other rights that have not had and would not reasonably be
22.
expected to have a Material Adverse Effect.
3.11 PERFORMANCE OF SERVICES. Except as set forth in Part 3.11
of the Company Disclosure Schedule, no customer or other Person has asserted or
threatened to assert any claim against the Company (a) under or based upon any
warranty provided by or on behalf of the Company, or (b) based upon any services
performed by the Company, except in the case of clauses "(a)" and "(b)" for any
assertion or threatened assertion of a claim that has not resulted in the
imposition on or incurrence by the Company, and could not reasonably be expected
to result in the imposition on or incurrence by the Company, Parent, the
Surviving Corporation or any other Subsidiary of Parent, of any Accrued
Liability or Potential Liability.
3.12 LIABILITIES. The Company does not have any accrued,
contingent or other liabilities of any nature, either matured or unmatured,
except for: (a) liabilities identified as such in the "liabilities" column of
the Unaudited Interim Balance Sheet; (b) normal and recurring current
liabilities that have been incurred by the Company since March 31, 2003 in the
ordinary course of business and consistent with past practices; and (c)
liabilities described in Part 3.12 of the Company Disclosure Schedule. The
Company is not a party to and has not otherwise effected any securitization
transactions or "off-balance sheet arrangements" (as defined in Item 303(a) of
Regulation S-K of the SEC).
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is, and
has at all times been, in compliance in all material respects with all
applicable Legal Requirements except where the failure to be in compliance has
not resulted in the imposition on or incurrence by the Company, and could not
reasonably be expected to result in the imposition on or incurrence by the
Company, Parent, the Surviving Corporation or any other Subsidiary of Parent, of
any Accrued Liability or Potential Liability. Since July 1, 2001, the Company
has not received any notice or other communication from any Governmental Body or
other Person regarding any actual or possible violation of, or failure to comply
with, any Legal Requirement.
3.14 CERTAIN BUSINESS PRACTICES. The Company has not, and (to
the best of the knowledge of the Company) no director, officer, agent or
employee of the Company has, (a) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity,
(b) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (c)
made any other unlawful payment.
3.15 GOVERNMENTAL AUTHORIZATIONS. The Company holds all
Governmental Authorizations necessary to enable the Company to conduct its
business in the manner in which such business is currently being conducted,
except where the failure to hold such Governmental Authorizations has not had
and would not reasonably be expected to have a Material Adverse Effect. All such
Governmental Authorizations are valid and in full force and effect. The Company
is, and at all times since July 1, 2001 has been, in substantial compliance with
the terms and requirements of such Governmental Authorizations, except where the
failure to be in compliance with the terms and requirements of such Governmental
Authorizations has not had and would not reasonably be expected to have a
Material Adverse Effect. Since July 1, 2001, the Company has not received any
notice or other communication from any Governmental Body
23.
regarding (i) any actual or possible violation of or failure to comply with any
term or requirement of any material Governmental Authorization, or (ii) any
actual or possible revocation, withdrawal, suspension, cancellation, termination
or modification of any material Governmental Authorization.
3.16 TAX MATTERS.
(a) To the best of the knowledge of the Company, each
of the Company Returns (i) has been or will be filed on or before the applicable
due date (including any extensions of such due date), and (ii) has been, or will
be when filed, prepared in all material respects in compliance with all
applicable Legal Requirements. All amounts shown on the Company Returns to be
due on or before the Closing Date have been or will be paid on or before the
Closing Date.
(b) The Unaudited Interim Balance Sheet fully accrues
all actual and contingent liabilities for Taxes with respect to all periods
through March 31, 2003 in accordance with generally accepted accounting
principles. The Company will establish, in the ordinary course of business and
consistent with its past practices, reserves adequate for the payment of all
Taxes for the period from April 1, 2003 through the Closing Date.
(c) No Company Return is being examined or audited by
any Governmental Body. Except for extensions or waivers of the limitation period
applicable to any of the Company Returns related to any income Tax, no extension
or waiver has been granted (by the Company or any other Person), and no such
extension or waiver has been requested from the Company.
(d) No claim or Legal Proceeding is pending or, to
the best of the knowledge of the Company, has, since July 1, 2001, been
threatened against or with respect to the Company in respect of any material
Tax. There are no unsatisfied liabilities for material Taxes (including
liabilities for interest, additions to tax and penalties thereon and related
expenses) with respect to any notice of deficiency or similar document received
by the Company with respect to any material Tax (other than liabilities for
Taxes asserted under any such notice of deficiency or similar document which are
being contested in good faith by the Company and with respect to which adequate
reserves for payment have been established on the Unaudited Interim Balance
Sheet). There are no liens for material Taxes upon any of the assets of the
Company except liens for current Taxes not yet due and payable. The Company is
not, and the Company will not be, required to include any adjustment in taxable
income for any tax period (or portion thereof) pursuant to Section 481 or 263A
of the Code (or any comparable provision of state or foreign Tax laws) as a
result of transactions or events occurring, or accounting methods employed,
prior to the Closing. The Company has not been either a "distributing
corporation" or a "controlled corporation" in a distribution of stock intended
to qualify for tax-free treatment under Section 355 of the Code (i) in the two
years prior to the date of this Agreement or (ii) which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Offer or the
Merger.
(e) There is no agreement, plan, arrangement or other
Contract covering any employee or independent contractor or former employee or
independent contractor
24.
of the Company that, considered individually or considered collectively with any
other such Contracts, will, or could reasonably be expected to, give rise
directly or indirectly to the payment of any amount that would not be deductible
pursuant to Section 280G or Section 162 of the Code (or any comparable provision
under state or foreign Tax laws). The Company is not and has never been a party
to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract that has resulted in the imposition on
or incurrence by the Company, or could reasonably be expected to result in the
imposition on or incurrence by the Company, Parent, the Surviving Corporation or
any other Subsidiary of Parent, of any Accrued Liability or Potential Liability.
3.17 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Other than those benefits available under COBRA
to any former employee of the Company, no former employee of the Company is
receiving or is scheduled to receive (and no spouse or other dependent of any
such former employee is receiving or is scheduled to receive) any benefits
(whether from the Company or otherwise) relating to such former employee's
employment with the Company.
(b) The Company has provided to Parent an accurate
and complete copy of each employment agreement or severance agreement between
the Company and any current or former employee of the Company that has created
or could reasonably be expected to give rise to an Accrued Liability or a
Potential Liability. With the exception of those current and former employees
for whom the Company has provided to Parent an accurate and complete copy of an
employment agreement or severance agreement between the Company and such current
or former employee of the Company, the employment of each of the Company's
employees is terminable by the Company at will. No Person is currently
performing services on behalf of the Company as an independent contractor of the
Company other than the individual who performs accounting support services for
the Company. The Company has delivered or made available to Parent an accurate
and complete copy of each employee manual, employee handbook, disclosure
material, policy statement and other material relating to the employment of each
of the current and former employees of the Company.
(c) The Company is not a party to or bound by, and
the Company has never been a party to or bound by, any union contract,
collective bargaining agreement or similar Contract, except where previously
being a party to or bound by any of the foregoing has not resulted in the
imposition on or incurrence by the Company, and could not reasonably be expected
to result in the imposition on or incurrence by the Company, Parent, the
Surviving Corporation or any other Subsidiary of Parent, of any Accrued
Liability or Potential Liability.
(d) The Company is not, and has never been engaged,
in any unfair labor practice of any nature, except to the extent that any such
practice has not resulted in the imposition on or incurrence by the Company, and
could not reasonably be expected to result in the imposition on or incurrence by
the Company, Parent, the Surviving Corporation or any other Subsidiary of
Parent, of any Accrued Liability or Potential Liability. There are no actions,
suits, claims, labor disputes or grievances pending or, to the best of the
knowledge of the Company, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters
25.
involving any Company Employee, including, without limitation, charges of unfair
labor practices or discrimination complaints.
(e) None of the current or former independent
contractors of the Company could properly be reclassified as an employee under
the Code, except where such a reclassification (or the fact that such a
reclassification is proper under the Code) has not resulted in the imposition on
or incurrence by the Company, and could not reasonably be expected to result in
the imposition on or incurrence by the Company, Parent, the Surviving
Corporation or any other Subsidiary of Parent, of any Accrued Liability or
Potential Liability. To the best of the knowledge of the Company, there are no,
and at no time has there been, any independent contractors who have provided
services to the Company or any Company Affiliate for a period of six consecutive
months or longer. No independent contractor of the Company is eligible to
participate in any Company Employee Plan.
(f) Part 3.17(f) of the Company Disclosure Schedule
contains an accurate and complete list as of the date hereof of each Company
Employee Plan and each Company Employee Agreement. The Company does not intend
to and has not committed to establish or enter into any new Company Employee
Plan or Company Employee Agreement, or to modify any Company Employee Plan or
Company Employee Agreement (except to conform any such Company Employee Plan or
Company Employee Agreement to the requirements of any applicable Legal
Requirements, in each case as previously disclosed to Parent in writing or as
required by this Agreement).
(g) The Company has delivered or made available to
Parent: (i) correct and complete copies of all documents setting forth the terms
of each Company Employee Plan and each Company Employee Agreement, including all
amendments thereto and all related trust documents; (ii) the three most recent
annual reports (Form Series 5500 and all schedules and financial statements
attached thereto), if any, required under ERISA or the Code in connection with
each Company Employee Plan; (iii) if the Company Employee Plan is subject to the
minimum funding standards of Section 302 of ERISA, the most recent annual and
periodic accounting of Company Employee Plan assets; (iv) the most recent
summary plan description together with the summaries of material modifications
thereto, if any, required under ERISA with respect to each Company Employee
Plan; (v) all material written Contracts relating to each Company Employee Plan,
including administrative service agreements and group insurance contracts; (vi)
all material written materials provided to any Company Employee relating to any
Company Employee Plan and any proposed Company Employee Plans, in each case,
relating to any amendments, terminations, establishments, increases or decreases
in benefits, acceleration of payments or vesting schedules or other events that
would result in any liability to the Company or any Company Affiliate; (vii) all
material correspondence to or from any Governmental Body relating to any Company
Employee Plan since July 1, 2001; (viii) all COBRA forms and related notices
used by the Company with respect to any Company Employee Plan; (ix) all
insurance policies in the possession of the Company or any Company Affiliate
pertaining to fiduciary liability insurance covering the fiduciaries for each
Company Employee Plan; (x) all discrimination tests required under the Code for
each Company Employee Plan intended to be qualified under Section 401(a) of the
Code for the three most recent plan years; and (xi) the most recent IRS
determination or opinion letter issued with respect to each Company Employee
Plan intended to be qualified under Section 401(a) of the Code.
26.
(h) The Company and each of the Company Affiliates
have materially performed all obligations required to be performed by them under
each Company Employee Plan and are not in default or violation of, and the
Company does not have knowledge of any default or violation by any other party
to, the terms of any Company Employee Plan. Each Company Employee Plan has been
established and maintained substantially in accordance with its terms and in
substantial compliance with all applicable Legal Requirements, including ERISA
and the Code. Any Company Employee Plan intended to be qualified under Section
401(a) of the Code has obtained or is the subject of a favorable determination
letter (or opinion letter, if applicable) as to its qualified status under the
Code. No "prohibited transaction," within the meaning of Section 4975 of the
Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section
408 of ERISA, has occurred with respect to any Company Employee Plan. There are
no claims or Proceedings pending, or, to the best of the knowledge of the
Company, threatened (other than routine claims for benefits), against any
Company Employee Plan or against the assets of any Company Employee Plan. Each
Company Employee Plan (other than any Company Employee Plan to be terminated
prior to the Closing in accordance with this Agreement) can be amended,
terminated or otherwise discontinued after the Closing in accordance with its
terms, without liability to Parent, the Company or any Company Affiliate (other
than ordinary administration expenses). There are no audits, inquiries or
Proceedings pending or, to the best of the knowledge of the Company, threatened
by the IRS, DOL, or any other Governmental Body with respect to any Company
Employee Plan. Neither the Company nor any Company Affiliate has ever incurred
any penalty or tax with respect to any Company Employee Plan under Section
502(i) of ERISA or Sections 4975 through 4980 of the Code. Each of the Company
and the Company Affiliates have made all contributions and other payments
required by and due under the terms of each Company Employee Plan.
(i) Neither the Company nor any Company Affiliate has
ever maintained, established, sponsored, participated in, or contributed to any:
(i) Company Pension Plan subject to Title IV of ERISA; or (ii) "multiemployer
plan" within the meaning of Section (3)(37) of ERISA. Neither the Company nor
any Company Affiliate has ever maintained, established, sponsored, participated
in or contributed to, any Company Pension Plan in which stock of the Company or
any Company Affiliate is or was held as a plan asset.
(j) No Company Employee Plan provides (except at no
cost to the Company or any Company Affiliate), or reflects or represents any
liability of the Company or any Company Affiliate to provide, retiree life
insurance, retiree health benefits or other retiree employee welfare benefits to
any Person for any reason, except as may be required by COBRA or other
applicable Legal Requirements. Other than commitments made that involve no
future costs to the Company or any Company Affiliate, neither the Company nor
any Company Affiliate has ever represented, promised or contracted (whether in
oral or written form) to any Company Employee (either individually or to Company
Employees as a group) or any other Person that such Company Employee(s) or other
Person would be provided with retiree life insurance, retiree health benefit or
other retiree employee welfare benefits, except to the extent required by
applicable Legal Requirements.
(k) Except as set forth in Part 3.17(k) of the
Company Disclosure Schedule, and except as expressly required or provided by
this Agreement, neither the execution of this Agreement nor the acquisition of,
or the issuance and delivery of shares of Parent
27.
Common Stock in exchange for, any shares of Company Common Stock by Acquisition
Sub pursuant to the Offer or the consummation of the Merger or any of the other
transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Company Employee Plan, Company Employee Agreement, trust or loan that will or
could reasonably be expected to result (either alone or in connection with any
other circumstance or event) in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any Company
Employee.
(l) Except as set forth in Part 3.17(l) of the
Company Disclosure Schedule, the Company and each of the Company Affiliates: (i)
is, and at all times has been, in substantial compliance with all applicable
Legal Requirements respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Company Employees, including the health care continuation requirements of COBRA,
the requirements of FMLA, the requirements of HIPAA and any similar provisions
of state law; (ii) has withheld and reported all amounts required by applicable
Legal Requirements or by Contract to be withheld and reported with respect to
wages, salaries and other payments to Company Employees; (iii) is not liable for
any arrears of wages or any taxes or any penalty for failure to comply with the
Legal Requirements applicable of the foregoing; and (iv) 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 Company Employees (other than
routine payments to be made in the normal course of business and consistent with
past practice). There are no pending or, to the best of the knowledge of the
Company, threatened or reasonably anticipated claims or Proceedings against the
Company or any Company Affiliate under any worker's compensation policy or
long-term disability policy.
(m) To the best of the knowledge of the Company, no
stockholder of the Company nor any Company Employee is obligated under any
Contract or subject to any judgment, decree, or order of any court or other
Governmental Body that would interfere with such Person's efforts to promote the
interests of the Company or that would interfere with the business of the
Company or any Company Affiliate. Neither the execution nor the delivery of this
Agreement, nor the carrying on of the business of the Company or any Company
Affiliate as presently conducted nor any activity of such stockholder or Company
Employees in connection with the carrying on of the business of the Company or
any Company Affiliate as presently conducted will, to the best of the knowledge
of the Company, conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default under, any Contract under which any
stockholder of the Company or any Company Employee is bound.
3.18 ENVIRONMENTAL MATTERS. The Company (a) is in compliance
in all material respects with all applicable Environmental Laws, and (b)
possesses all permits and other Governmental Authorizations required under
applicable Environmental Laws, and is in compliance with the terms and
conditions thereof, except where the failure to be in compliance has not
resulted in the imposition on or incurrence by the Company, and could not
reasonably be expected to result in the imposition on or incurrence by the
Company, Parent, the Surviving Corporation or any other Subsidiary of Parent, of
any Accrued Liability or Potential Liability. The Company has not received since
July 1, 2001 any notice or other communication (in writing
28.
or otherwise), whether from a Governmental Body, citizens group, Employee or
otherwise, that alleges that the Company is not in compliance with any
Environmental Law, and, to the best of the knowledge of the Company, there are
no circumstances that may prevent or interfere with the compliance by the
Company with any Environmental Law in the future. To the best of the knowledge
of the Company, (i) all property that is leased to, controlled by or used by the
Company, and all surface water, groundwater and soil associated with or adjacent
to such property, is free of any material environmental contamination of any
nature, (ii) none of the property leased to, controlled by or used by the
Company contains any underground storage tanks, asbestos, equipment using PCBs,
or underground injection xxxxx, and (iii) none of the property leased to,
controlled by or used by the Company contains any septic tanks in which process
wastewater or any Materials of Environmental Concern have been disposed of. The
Company has never sent or transported, or arranged to send or transport, any
Materials of Environmental Concern to a site that, pursuant to any applicable
Environmental Law, (A) has been placed on the "National Priorities List" of
hazardous waste sites or any similar state list, (B) is otherwise designated or
identified as a potential site for remediation, cleanup, closure or other
environmental remedial activity, or (C) is subject to a Legal Requirement to
take "removal" or "remedial" action as detailed in any applicable Environmental
Law or to make payment for the cost of cleaning up any site, except with respect
to each of clauses "(A)," "(B)" and "(C)," where such action has not resulted in
the imposition on or incurrence by the Company, and could not reasonably be
expected to result in the imposition on or incurrence by the Company, Parent,
the Surviving Corporation or any other Subsidiary of Parent, of any Accrued
Liability or Potential Liability.
3.19 INSURANCE. The Company has delivered to Parent a copy of
all current material insurance policies and all material self insurance programs
and arrangements relating to the business, assets and operations of the Company.
Each of such insurance policies is in full force and effect. Since July 1, 2001,
the Company has not received any notice or other communication regarding any
actual or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage 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, except with respect to the directors' and
officers' liability policy of the Company (for which the Company has delivered
to Parent an accurate and complete copy of each such notice or other
communication). Except as set forth in Part 3.19 of the Company Disclosure
Schedule, there is no pending workers' compensation or other claim under or
based upon any insurance policy of the Company. With respect to each Legal
Proceeding that has been filed against the Company, the Company has provided
written notice of such Legal Proceeding to the appropriate insurance carrier(s),
and no such carrier has issued a denial of coverage or a reservation of rights
with respect to any such Legal Proceeding, or informed the Company of its intent
to do so.
3.20 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Company SEC Documents filed prior to the date of this Agreement, between the
date of the Company's last proxy statement filed with the SEC and the date of
this Agreement, no event has occurred that would be required to be reported by
the Company pursuant to Item 404 of Regulation S-K promulgated by the SEC.
29.
3.21 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 3.21 of the Company
Disclosure Schedule, there is no pending Legal Proceeding, and (to the best of
the knowledge of the Company) no Person has threatened to commence any Legal
Proceeding: (i) that involves the Company or any of the assets owned or used by
the Company; (ii) that involves any action against any director (or former
director) or officer (or former officer) of the Company under Section 8A or
Section 20(b) of the Securities Act or Section 21(d) or Section 21C of the
Exchange Act; (iii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, the Offer or the Merger
or any of the other transactions contemplated by this Agreement; or (iv) with
respect to which the Company may have or may incur any liability, for
indemnification or otherwise. To the best of the knowledge of the Company, no
event has occurred, and no claim, dispute or other condition or circumstance
exists that could reasonably be expected to, give rise to or serve as a basis
for the commencement of any such Legal Proceeding. The Company has provided to
Parent copies of all pleadings, correspondence and other documents relating to
each Legal Proceeding listed in Part 3.21 of the Company Disclosure Schedule.
(b) There is no order, writ, injunction, judgment or
decree to which the Company, or any of the assets owned or used by the Company,
is subject, except for those writs, injunctions, judgments and decrees that have
not resulted in the imposition on or incurrence by the Company, and could not
reasonably be expected to result in the imposition on or the incurrence by the
Company, Parent, the Surviving Corporation or any other Subsidiary of Parent, of
any Accrued Liability or Potential Liability. To the best of the knowledge of
the Company, no officer or key employee of the Company is subject to any order,
writ, injunction, judgment or decree that prohibits such officer or other
employee from engaging in or continuing any conduct, activity or practice
relating to the business of the Company.
3.22 AUTHORITY; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES;
BINDING NATURE OF AGREEMENT. The Company has the absolute and unrestricted
right, power and authority to enter into and to perform its obligations under
this Agreement. The board of directors of the Company (at a meeting duly called
and held) has, by the unanimous vote of all directors of the Company, (a)
determined that this Agreement and the transactions contemplated by this
Agreement, including the Offer and the Merger, are fair to and in the best
interests of the holders of Company Common Stock and the holders of Company
Preferred Stock, (b) approved this Agreement and the transactions contemplated
by this Agreement, including the Offer and the Merger, in accordance with the
requirements of the DGCL, (c) declared that this Agreement is advisable, (d)
resolved to recommend that the stockholders of the Company accept the Offer and
tender their shares of Company Capital Stock pursuant to the Offer and (if
required by applicable law in order to effectuate the Merger) adopt this
Agreement, and (e) to the extent necessary, adopted a resolution for the purpose
and having the effect of causing the Company not to be subject to any state
takeover law or similar Legal Requirement that might otherwise apply to the
Offer, the Merger, any of the Stockholder Agreements or any of the other
transactions contemplated by this Agreement or any of the Stockholder
Agreements. This Agreement constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific
30.
performance, injunctive relief and other equitable remedies. Prior to the
execution of the Stockholder Agreements, the board of directors of the Company
approved the Stockholder Agreements and the transactions contemplated thereby.
No state takeover statute or similar Legal Requirement applies or purports to
apply to this Agreement, the Offer, the Merger or any of the other transactions
contemplated by this Agreement.
3.23 SECTION 203 OF THE DGCL NOT APPLICABLE. As of the date of
this Agreement and at all times on or prior to the Effective Time, the board of
directors of the Company has taken and will take all actions so that the
restrictions applicable to business combinations contained in Section 203 of the
DGCL are, and will be, inapplicable to (i) the execution, delivery and
performance of this Agreement and each of the Stockholder Agreements and (ii)
the acquisition of, and the issuance and delivery of shares of Parent Common
Stock in exchange for, any shares of Company Capital Stock by Acquisition Sub
pursuant to the Offer, the consummation of the Merger or any of the other
transactions contemplated by this Agreement or any of the Stockholder
Agreements.
3.24 NO DISCUSSIONS. Since July 1, 2001, the Company has not
waived any rights of the Company under any confidentiality, "standstill,"
nonsolicitation or similar agreement with any Person.
3.25 INTENT TO TENDER; VOTE REQUIRED. The Company has been
advised and believes in good faith that all of its directors and executive
officers currently intend to tender all of their shares of Company Capital Stock
pursuant to the Offer. If required under applicable law, the affirmative vote of
the holders of a majority of the shares of Company Common Stock and Company
Preferred Stock issued and outstanding on the record date for the Company
Stockholders' Meeting, voting together as a single class (the "Required Company
Stockholder Vote"), is the only vote of the holders of any class or series of
the Company's capital stock necessary to adopt this Agreement, approve the
Merger or consummate any of the other transactions contemplated by this
Agreement.
3.26 NON-CONTRAVENTION; CONSENTS. Neither (1) the execution,
delivery or performance of this Agreement, nor (2) the acquisition of, or the
issuance and delivery of shares of Parent Common Stock in exchange for, any
shares of Company Capital Stock by Acquisition Sub pursuant to the Offer or the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a
violation of (i) any of the provisions of the certificate of
incorporation or bylaws of the Company, or (ii) any resolution
adopted by the stockholders, the board of directors or any
committee of the board of directors of the Company;
(b) contravene, conflict with or result in a
violation of, or give any Governmental Body or other Person
the right to challenge the Offer, the Merger or any of the
other transactions contemplated by this Agreement or to
exercise any remedy or obtain any relief under, any Legal
Requirement or any order, writ, injunction, judgment
31.
or decree to which the Company, or any of the assets owned or
used by the Company, is subject;
(c) contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate or modify, any Governmental Authorization
that is held by the Company or that otherwise relates to the
business of the Company or to any of the assets owned or used
by the Company;
(d) contravene, conflict with or result in a
violation or breach of, or result in a default under, any
provision of any Company Contract that constitutes a Material
Contract, or give any Person the right to (i) declare a
default or exercise any remedy under any such Company
Contract, (ii) accelerate the maturity or performance of any
such Company Contract, or (iii) cancel, terminate or modify
any term of such Company Contract;
(e) result in the imposition or creation of any
Encumbrance upon or with respect to any material asset owned
or used by the Company; or
(f) result in, or increase the likelihood of, the
transfer of any material asset of the Company to any Person.
Except as may be required by the Exchange Act, the DGCL or the NASD Bylaws, the
Company was not, is not and will not be required to make any filing with or give
any notice to, or, except as set forth in Part 3.26 of the Company Disclosure
Schedule, to obtain any Consent from, any Person in connection with (x) the
execution, delivery or performance of this Agreement or any of the Stockholder
Agreements, or (y) the acquisition of, or the issuance and delivery of shares of
Parent Common Stock in exchange for, any shares of Company Capital Stock by
Acquisition Sub pursuant to the Offer or (z) the consummation of the Merger or
any of the other transactions contemplated by this Agreement or any of the
Stockholder Agreements.
3.27 FAIRNESS OPINION. Petkevich, financial advisor to the
Company, has delivered to the board of directors of the Company, its opinion,
dated as of the date of this Agreement, to the effect that the aggregate
consideration to be received by the stockholders of the Company pursuant to the
Offer and the Merger is fair to such stockholders in the aggregate, from a
financial point of view. The Company has furnished an accurate and complete copy
of its written opinion to Parent.
3.28 FINANCIAL ADVISOR. Except for Petkevich, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Offer, the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has delivered to Parent accurate and
complete copies of all agreements under which any such fees, commissions or
other amounts have been paid or may become payable and all indemnification and
other agreements related to the engagement of Petkevich.
32.
3.29 RIGHTS AGREEMENT. The Company has amended the Rights
Agreement to provide that: (a) (i) neither Parent nor Acquisition Sub, nor any
affiliate of Parent or Acquisition Sub, shall be deemed to be an Acquiring
Person (as defined in the Rights Agreement); (ii) no Distribution Date (as
defined in the Rights Agreement) or Stock Acquisition Date (as defined in the
Rights Agreement) shall be deemed to occur; and (iii) the Rights will not
separate from the Company Common Stock, in the case of each of clauses "(i),"
"(ii)," or "(iii)," as a result of the execution, delivery or performance of
this Agreement or any of the Stockholder Agreements or the acquisition of, or
the issuance and delivery of shares of Parent Common Stock in exchange for, any
shares of Company Capital Stock by Acquisition Sub pursuant to the Offer or the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or by any of the Stockholder Agreements; (b) the moment in time
immediately prior to the Effective Time shall be the "Final Expiration Date" (as
defined in the Rights Agreement); and (c) none of the Company, Parent,
Acquisition Sub or the Surviving Corporation, nor any of their respective
affiliates, shall have any obligations under the Rights Agreement to any holder
(or former holder) of Rights as of or following the Acceptance Date or the
Effective Time.
3.30 FULL DISCLOSURE.
(a) This Agreement (including the Company Disclosure
Schedule) does not, and the certificate referred to in clause "(f)(ii)" of Annex
II will not, (i) contain any representation, warranty or information that is
false or misleading with respect to any material fact, or (ii) omit to state any
material fact necessary in order to make the representations, warranties and
information contained and to be contained herein and therein (in the light of
the circumstances under which such representations, warranties and information
were or will be made or provided) not false or misleading.
(b) None of the information supplied or to be
supplied by or on behalf of the Company for inclusion in the Registration
Statement, the Post-Effective Amendment, the Offer Documents or the Schedule
14D-9 will, at the times the Registration Statement is filed with the SEC, at
the time the Post-Effective Amendment is filed with the SEC, at the time the
Offer Documents are mailed to the stockholders of the Company, at the time the
Schedule 14D-9 is mailed to the stockholders of the Company or at any time
between the time the Registration Statement is filed with the SEC and the
Acceptance Date, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading. None of the information supplied or to be supplied by
or on behalf of the Company for inclusion in the Proxy Statement will, at the
time the Proxy Statement is mailed to the stockholders of the Company or at the
time of the Company Stockholders' Meeting (or any adjournment or postponement
thereof), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB
Parent and Acquisition Sub represent and warrant to the Company as
follows:
33.
4.1 VALID EXISTENCE. Parent is a corporation duly incorporated
and validly existing under the laws of the State of Oregon. Acquisition Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of
Delaware. Each of Parent and Acquisition Sub has all
necessary power and authority: (a) to conduct its business in the manner in
which its business is currently being conducted; and (b) to own and use its
assets in the manner in which its assets are currently owned and used.
4.2 CAPITALIZATION. The authorized capital stock of Parent
consists of 200,000,000 shares of Parent Common Stock and 20,000,000 shares of
preferred stock of Parent. As of June 30, 2003, 31,177,681 shares of Parent
Common Stock were issued and outstanding. As of the date of this Agreement, no
shares of preferred stock of Parent are outstanding. All of the issued and
outstanding shares of Parent Common Stock have been duly authorized and validly
issued, and are fully paid and nonassessable.
4.3 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has delivered or made available to the Company
accurate and complete copies (excluding copies of exhibits) of the Parent SEC
Documents. All statements, reports, schedules, forms and other documents
required to have been filed by Parent with the SEC since January 1, 2003 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): (i) each of the Parent 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 (ii) none of the Parent 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.
(b) The consolidated financial statements (including any
related notes) contained in the Parent 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 generally accepted
accounting principles applied on a consistent basis throughout the periods
covered (except as may be indicated in the notes to such financial statements
and, in the case of unaudited statements, as permitted by Form 10-Q of the SEC,
and except that unaudited financial statements may not contain footnotes and are
subject to normal and recurring year-end audit adjustments which will not,
individually or in the aggregate, be material in amount); and (iii) fairly
present the consolidated financial position of Parent and its consolidated
subsidiaries as of the respective dates thereof and the consolidated results of
operations of Parent and its consolidated subsidiaries for the periods covered
thereby.
4.4 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and
Acquisition Sub have the absolute and unrestricted right, power and authority to
perform their obligations under this Agreement; and the execution, delivery and
performance by Parent and Acquisition Sub of this Agreement have been duly
authorized by all necessary action on the part of Parent and Acquisition Sub and
their respective boards of directors. This Agreement constitutes the legal,
valid and binding obligation of Parent and Acquisition Sub, enforceable against
them in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy,
34.
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
4.5 NON-CONTRAVENTION; CONSENTS. Neither the execution and
delivery of this Agreement by Parent and Acquisition Sub nor the acquisition of,
or the issuance and delivery of shares of Parent Common Stock in exchange for,
any shares of Company Capital Stock by Acquisition Sub pursuant to the Offer or
the consummation of the Merger will (a) contravene, conflict with or result in a
violation or any breach of any provision of the articles or certificate of
incorporation or bylaws of Parent or Acquisition Sub, (b) result in a material
default by Parent or Acquisition Sub under any material Contract to which Parent
or Acquisition Sub is a party, except for any default that will not have a
material adverse effect on Parent, or (c) result in a material violation by
Parent or Acquisition Sub of any Legal Requirement, order, writ, injunction,
judgment or decree to which Parent or Acquisition Sub is subject, except for any
violation that will not have a material adverse effect on Parent.
4.6 NO VOTE REQUIRED. No vote of the holders of Parent Common
Stock is required to authorize the issuance of shares of Parent Common Stock in
connection with the Offer or the Merger.
4.7 DISCLOSURE. None of the information supplied or to be
supplied by or on behalf of Parent for inclusion in the Registration Statement,
the Post-Effective Amendment or the Offer Documents will, at the time the
Registration Statement is filed with the SEC, at the time the Post-Effective
Amendment is filed with the SEC or at the time the Offer Documents are mailed to
the stockholders of the Company, as the case may be, or on the Acceptance Date,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. None of the information supplied or to be supplied by or on behalf
of Parent for inclusion in the Proxy Statement will, at the time the Proxy
Statement is mailed to the stockholders of the Company or at the time of the
Company Stockholders' Meeting (or any adjournment or postponement thereof),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
SECTION 5. CERTAIN COVENANTS OF THE COMPANY
5.1 ACCESS AND INVESTIGATION.
(a) During the period from the date of this Agreement
through the Effective Time (the "Pre-Closing Period"), the Company shall, and
shall cause the Company's Representatives to: (a) provide Parent and Parent's
Representatives with reasonable access to the Company's Representatives,
personnel and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to the Company; and (b)
provide Parent and Parent's Representatives with such copies of the existing
books, records, Tax Returns, work papers and other documents and information
relating to the Company, and with such additional financial, operating and other
data and information regarding the Company, as Parent may reasonably request.
35.
(b) Without limiting the generality of Sections
5.1(a) and 5.1(c), during the Pre-Closing Period, the Company shall promptly
provide Parent with copies of:
(i) all material operating and financial
reports prepared by the Company for its senior management, including
(A) copies of the unaudited monthly balance sheets of the Company and
any related unaudited monthly statements of operations, statements of
stockholders' equity and statements of cash flows and (B) copies of any
reports prepared for the Company's senior management;
(ii) any written material or communication
sent by or on behalf of the Company to its stockholders and any written
consent or other written material or communication delivered to the
Company by or on behalf of any of its stockholders;
(iii) any written material or communication
sent by the Company to, or received from Foundation Growth Investments
LLC or EI Acquisition Inc., or any Representative of either of them;
(iv) any material notice, material document
or other material communication sent by or on behalf of the Company to
any party to any Company Contract or sent to the Company by or on
behalf of any party to any Company Contract;
(v) any notice, report or other document
filed with or sent to any Governmental Body on behalf of the Company in
connection with the Offer or the Merger or any of the other
transactions contemplated by this Agreement; and
(vi) any material notice, report or other
document received by the Company from any Governmental Body.
(c) Without limiting the generality of Sections
5.1(a) and 5.1(b), the Company shall deliver to Parent two business days before
any scheduled expiration date of the Offer (i) a statement (an "Excess Cash
Statement") setting forth (A) the Company's calculation of its cash and cash
equivalents as of such scheduled expiration date, identifying the accounts in
which such cash is located and, with respect to each cash equivalent, the nature
of such cash equivalent and a description of where it is located and (B) an
itemization of each Accrued Liability and Potential Liability (including a
reasonable description of the material facts related to each Potential
Liability, the maximum dollar amount that the Company may reasonably be expected
to pay or become obligated to pay in connection with such Potential Liability
and the adjustments, if any, to such amount agreed to by the Company and Parent
as of the date of this Agreement and set forth on such Projected Cash
Disbursement Schedule) and (ii) a certificate executed by the Company's Chief
Executive Officer and its Chief Financial Officer stating without qualification
that such Excess Cash Statement is accurate and complete (it being understood
that notwithstanding such certification, Parent will not be bound by any
calculation or itemization set forth in such Excess Cash Statement for any
purpose under this Agreement).
5.2 OPERATION OF THE COMPANY'S BUSINESS.
(a) During the Pre-Closing Period: (i) the Company
shall conduct its
36.
business and operations (A) in the ordinary course and in accordance with past
practices and, except as otherwise permitted pursuant to Section 5.2(b)(vi), in
accordance with the Projected Cash Disbursement Schedule and (B) in compliance
with all applicable Legal Requirements and the requirements of all Company
Contracts; (ii) the Company shall use commercially reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and maintain its relations and goodwill
with all suppliers, landlords, creditors, licensors, licensees, employees and
other Persons having business relationships with the Company; (iii) the Company
shall keep in full force all insurance policies of the Company in effect as of
the date of this Agreement; (iv) the Company shall promptly notify Parent 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 transactions
contemplated by this Agreement, and (B) any Legal Proceeding commenced or
threatened in writing against, relating to or involving or otherwise affecting
the Company and any material development in any such Legal Proceeding; and (v)
the Company shall (to the extent requested by Parent) cause its officers to
report regularly to Parent concerning the status of the Company's business.
(b) During the Pre-Closing Period, the Company shall
not (without the prior written consent of Parent):
(i) declare, accrue (other than accruals in
respect of dividends required on the Company Preferred Stock), set
aside or pay any dividend or make any other distribution in respect of
any shares of capital stock, or repurchase, redeem or otherwise
reacquire any shares of capital stock or other securities;
(ii) sell, issue, grant or authorize the
issuance or grant of (A) any capital stock or other security (other
than up to 200,000 shares of Company Common Stock issued to the
landlord under the Lease in full satisfaction of the Company's
obligation to pay rent under the Lease), (B) any option, call, warrant
or right to acquire any capital stock or other security, or (C) any
instrument convertible into or exchangeable for any capital stock or
other security (except that the Company may issue shares of Company
Common Stock upon the valid exercise of Company Options outstanding as
of the date of this Agreement);
(iii) amend or waive any of its rights
under, or accelerate the vesting under, any provision of any of the
Company's stock option plans, any provision of any agreement evidencing
any outstanding stock option or any restricted stock purchase
agreement, or otherwise modify any of the terms of any outstanding
option, warrant or other security or any related Contract;
(iv) amend or permit the adoption of any
amendment to its certificate of incorporation or bylaws, or effect or
become a party to any merger, consolidation, share exchange, business
combination, amalgamation, recapitalization, reclassification of
shares, stock split, reverse stock split, division or subdivision of
shares, consolidation of shares or similar transaction;
37.
(v) form any Subsidiary or acquire any
equity interest or other interest in any other Entity;
(vi) make any single capital expenditure or
make any cash expenditure or payment or series of related capital
expenditures or payments not specifically contemplated by the Projected
Cash Disbursement Schedule in excess of $10,000 (provided, however,
that Parent shall not, after taking into account the interests of the
Company and Parent, unreasonably withhold its consent to any such
single expenditure or payment or series of related expenditures or
payments) or make capital expenditures or cash payments not
specifically contemplated by the Projected Cash Disbursement Schedule
in excess of $200,000 in the aggregate (provided, however, that Parent
shall not, after taking into account the interests of the Company and
Parent, unreasonably withhold its consent to any expenditure or payment
in excess of such aggregate amount)(it being understood that, to the
extent that the Company fully satisfies any liability of the Company
without having to make the entire projected cash expenditure or payment
attributed to such liability on the Projected Cash Disbursement
Schedule, then the Company may use the balance of the amount of such
projected cash expenditure or payment to satisfy any other liability of
the Company, and the amount so used shall not be taken into account in
determining whether the Company must seek Parent's consent pursuant to
this Section 5.2(b)(vi));
(vii) enter into or become bound by, or
permit any of the assets owned or used by it to become bound by, any
Material Contract, or amend or terminate, or waive or exercise any
material right or remedy under, any Material Contract;
(viii) acquire, lease or license any right
or other asset from any other Person or sell or otherwise dispose of,
or lease or license, any right or other asset to any other Person
(except in each case for immaterial assets acquired, leased, licensed
or disposed of by the Company in the ordinary course of business and
consistent with past practices), or waive or relinquish any material
right;
(ix) lend money to any Person, or incur or
guarantee any indebtedness or other liability;
(x) establish, adopt or amend any employee
benefit plan, pay any bonus or make any profit-sharing or similar
payment to, or increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any
of its directors, officers or employees;
(xi) hire any employee or promote any
employee;
(xii) change any of its personnel policies
or other business policies, or any of its methods of accounting or
accounting practices in any material respect;
(xiii) make any Tax election;
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(xiv) commence or settle any Legal
Proceeding (provided, however, that Parent shall not unreasonably
withhold its consent to any proposed settlement);
(xv) enter into any transaction or take any
other action outside the ordinary course of business or inconsistent
with past practices (other than as expressly permitted by this
Agreement); or
(xvi) agree, commit or offer to take any of
the actions described in clauses "(i)" through "(xv)" of this Section
5.2(b).
(c) During the Pre-Closing Period, the Company shall
(i) procure and maintain in effect six-year "tail" coverage (the "Tail Policy")
for the existing directors' and officers' insurance policies for the benefit of
each director and officer (and former director and officer) of the Company with
whom the Company has entered into an indemnification agreement (the "Insured
Persons") (or substantially similar coverage and amounts containing material
terms no less advantageous to such Insured Persons) with respect to each such
Insured Person's acts and omissions as a director or officer of the Company
occurring prior to the Effective Time and (ii) to the extent the Company has or
acquires knowledge that the Company has any obligation to any such Insured
Person to maintain in effect for the benefit of such Insured Person any policy
of directors' and officers' liability insurance other than the Tail Policy, use
commercially reasonable efforts to ensure that such obligation is promptly
terminated.
(d) During the Pre-Closing Period, the Company shall
promptly notify Parent in writing of: (i) the discovery by the Company 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 a material inaccuracy
in any representation or warranty made by the Company in this Agreement; (ii)
any event, condition, fact or circumstance that occurs, arises or exists after
the date of this Agreement and that would cause or constitute a material
inaccuracy in any representation or warranty made by the Company in this
Agreement if (A) 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 (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (iii) any material
breach of any covenant or obligation of the Company; and (iv) any event,
condition, fact or circumstance that would make the timely satisfaction of any
of the conditions set forth in Annex II impossible or unlikely or that has had
or could reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Company shall promptly advise
Parent in writing of (1) any Legal Proceeding or material claim threatened,
commenced or asserted against or with respect to the Company and (2) all
documents, materials and correspondence relating to any pending or threatened
Legal Proceeding. No notification given to Parent pursuant to this Section
5.2(c) shall limit or otherwise affect any of the representations, warranties,
covenants or obligations of the Company contained in this Agreement.
5.3 NO SOLICITATION.
(a) The Company shall not directly or indirectly, and
shall not authorize or permit any Representative of the Company directly or
indirectly to, (i) solicit, initiate, encourage or induce the making, submission
or announcement of any Acquisition
39.
Proposal (including by amending, or granting any waiver under, the Rights
Agreement), (ii) furnish any information regarding the Company to any Person in
connection with or in response to an Acquisition Proposal or an inquiry or
indication of interest that could lead to an Acquisition Proposal, (iii) engage
in discussions or negotiations with any Person with respect to any Acquisition
Proposal, (iv) approve, endorse or recommend any Acquisition Proposal or (v)
enter into any letter of intent or similar document or any Contract
contemplating or otherwise relating to any Acquisition Transaction; provided,
however, that prior to the Acceptance Date, this Section 5.3(a) shall not
prohibit the Company from furnishing nonpublic information regarding the Company
to, or entering into discussions with, any Person in response to a Superior
Offer that is submitted to the Company by such Person (and not withdrawn) if (1)
neither the Company nor any Representative of the Company shall have breached or
taken any action inconsistent with any of the provisions set forth in this
Section 5.3, (2) the board of directors of the Company concludes in good faith,
after having taken into account the advice of its outside legal counsel, that
such action is required in order for the board of directors of the Company to
comply with its fiduciary obligations to the Company's stockholders under
applicable law, (3) at least two business days prior to furnishing any such
nonpublic information to, or entering into discussions with, such Person, the
Company gives Parent written notice of the identity of such Person and of the
Company's intention to furnish nonpublic information to, or enter into
discussions with, such Person, and the Company receives from such Person an
executed confidentiality agreement containing customary limitations on the use
and disclosure of all nonpublic written and oral information furnished to such
Person by or on behalf of the Company and containing comprehensive "standstill"
provisions, and (4) at least two business days prior to furnishing any such
nonpublic information to such Person, the Company furnishes such nonpublic
information to Parent (to the extent such nonpublic information has not been
previously furnished by the Company to Parent). Without limiting the generality
of the foregoing, the Company acknowledges and agrees that any action
inconsistent with any of the provisions set forth in the preceding sentence by
any Representative of the Company, whether or not such Representative is
purporting to act on behalf of the Company, shall be deemed to constitute a
breach of this Section 5.3 by the Company.
(b) The Company shall promptly (and in no event later
than 24 hours after receipt of any Acquisition Proposal, any inquiry or
indication of interest that could lead to an Acquisition Proposal or any request
for nonpublic information) advise Parent orally and in writing of any
Acquisition Proposal, any inquiry or indication of interest that could lead to
an Acquisition Proposal or any request for nonpublic information relating to the
Company (including, except as otherwise expressly prohibited by the terms of any
confidentiality agreement to which the Company is a party that is in effect as
of the date of this Agreement, the identity of the Person making or submitting
such Acquisition Proposal, inquiry, indication of interest or request, and the
terms thereof) that is made or submitted by any Person prior to the Acceptance
Date. The Company shall keep Parent fully informed with respect to the status of
any such Acquisition Proposal, inquiry, indication of interest or request and
any modification or proposed modification thereto.
(c) The Company shall, upon execution of this
Agreement, immediately cease and cause to be terminated any existing discussions
with any Person that relate to any Acquisition Proposal (it being understood
that the Company may, in response to a
40.
communication from another Person, inform such Person that this Section 5.3(c)
requires that the Company cease and cause to be terminated any existing
discussions with any Person that relate to any Acquisition Proposal).
(d) The Company agrees not to release or permit the
release of any Person from, or to waive or permit the waiver of any provision
of, any confidentiality, "standstill" or similar agreement to which the Company
is a party or under which the Company has any rights, and will use its
commercially reasonable efforts to enforce or cause to be enforced each such
agreement at the request of Parent. The Company also will promptly request each
Person that has executed, on or after December 1, 2002, a confidentiality
agreement in connection with its consideration of a possible Acquisition
Transaction or equity investment to return all confidential information
heretofore furnished to such Person by or on behalf of the Company, and the
Company shall use commercially reasonable efforts to cause the return of such
confidential information.
SECTION 6. ADDITIONAL COVENANTS OF THE PARTIES
6.1 STOCKHOLDER APPROVAL; PROXY STATEMENT.
(a) As promptly as practicable following the
Acceptance Date (and following the expiration of any subsequent offering
period), if the adoption of this Agreement by the Company's stockholders is
required by applicable law in order to consummate the Merger, the Company shall
take all action necessary under all applicable Legal Requirements to call, give
notice of and hold a meeting of the holders of Company Capital Stock to vote on
the adoption of this Agreement (the "Company Stockholders' Meeting"). The
Company shall ensure that all proxies solicited in connection with the Company
Stockholders' Meeting are solicited in compliance with all applicable Legal
Requirements.
(b) As promptly as practicable following the
Acceptance Date (and following the expiration of any subsequent offering
period), if the adoption of this Agreement by the Company's stockholders is
required by applicable law in order to consummate the Merger, (i) the Company
shall prepare and file with the SEC the Proxy Statement and (ii) Parent shall
prepare and file with the SEC the Post-Effective Amendment. Each of Parent and
the Company shall use commercially reasonable efforts to cause the
Post-Effective Amendment and the Proxy Statement to comply with the rules and
regulations promulgated by the SEC, to respond promptly to any comments of the
SEC or its staff and to have the Post-Effective Amendment declared effective
under the Securities Act as promptly as practicable after it is filed with the
SEC. The Company will use commercially reasonable efforts to cause the Proxy
Statement to be mailed to the Company's stockholders, as promptly as practicable
after the Post-Effective Amendment is declared effective under the Securities
Act. The Company shall notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for any
amendment or supplement to the Proxy Statement or for additional information and
will supply Parent with copies of all correspondence between the Company or any
of its Representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement. The Company shall give Parent an
opportunity to comment on any correspondence with the SEC or its staff or any
proposed material to be included in the Proxy Statement prior to transmission to
the SEC or its staff and shall not transmit any such
41.
material to which Parent reasonably objects. If at any time prior to the Company
Stockholders' Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company shall promptly
prepare such an amendment or supplement and after obtaining the consent of
Parent to such amendment or supplement, shall promptly transmit such amendment
or supplement to the Company's stockholders. If any event relating to the
Company occurs, or if the Company becomes aware of any information, that should
be disclosed in an amendment or supplement to the Post-Effective Amendment or
the Proxy Statement, then the Company shall promptly inform Parent thereof and
shall, with respect to the Post-Effective Amendment, cooperate with Parent in
filing such amendment or supplement with the SEC and transmitting such
supplement or amendment to the Company's stockholders and, with respect to the
Proxy Statement, prepare such an amendment or supplement and after obtaining the
consent of Parent to such amendment or supplement, promptly transmit such
amendment or supplement to the Company's stockholders.
(c) Prior to the Effective Time, Parent shall use
commercially reasonable efforts to obtain all regulatory approvals needed to
ensure that the Parent Common Stock to be issued in the Merger will be
registered or qualified under the securities law of every jurisdiction of the
United States in which any registered holder of Company Capital Stock has an
address of record on the record date for determining the stockholders entitled
to notice of and to vote at the Company Stockholders' Meeting; provided,
however, that Parent shall not be required (i) to qualify to do business as a
foreign corporation in any jurisdiction in which it is not now qualified or (ii)
to file a general consent to service of process in any jurisdiction.
(d) Parent agrees to cause all shares of Company
Capital Stock owned by Parent or any subsidiary of Parent to be voted in favor
of the adoption of this Agreement at the Company Stockholders' Meeting.
(e) Notwithstanding anything to the contrary
contained in this Agreement, if Acquisition Sub and Parent together shall own
(by virtue of the Offer or otherwise) at least 90% of the issued and outstanding
shares of each class of Company Capital Stock, the parties shall take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable without a stockholders' meeting in accordance with Section 253 of
the DGCL.
6.2 REGULATORY APPROVALS. Each party shall use commercially
reasonable efforts to file, as soon as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed by such
party with any Governmental Body with respect to the Offer, the Merger and the
other transactions contemplated by this Agreement, and to submit promptly any
additional information requested by any such Governmental Body. The Company and
Parent shall respond as promptly as practicable to any inquiries or requests
received from any Governmental Body in connection with antitrust or related
matters. Each of the Company and Parent shall (1) give the other party prompt
notice of the commencement or threat of commencement of any Legal Proceeding by
or before any Governmental Body with respect to the Offer, the Merger or any of
the other transactions contemplated by this Agreement, (2) keep the other party
informed as to the status of any such Legal Proceeding or threat, and (3)
promptly inform the other party of any communication to or from any Governmental
Body regarding the Offer, the Merger or any of the other transactions
contemplated by this Agreement. Except as
42.
may be prohibited by any Governmental Body or by any Legal Requirement, (a) the
Company and Parent will consult and cooperate with one another, and will
consider in good faith the views of one another, in connection with any
analysis, appearance, presentation, memorandum, brief, argument, opinion or
proposal made or submitted in connection with any Legal Proceeding under or
relating to any foreign, federal or state antitrust or fair trade law, and (b)
in connection with any such Legal Proceeding, each of the Company and Parent
will permit authorized Representatives of the other party to be present at each
meeting or conference relating to any such Legal Proceeding and to have access
to and be consulted in connection with any document, opinion or proposal made or
submitted to any Governmental Body in connection with any such Legal Proceeding.
At the request of Parent, the Company shall agree to divest, sell, license,
dispose of, hold separate or otherwise take or commit to take any action that
limits the ability of the Company to operate or retain any of the businesses,
product lines or assets of the Company, provided that any such action is
conditioned upon the consummation of the Offer.
6.3 STOCK OPTIONS; WARRANTS.
(a) Parent and the Company acknowledge that Parent
shall not assume any Company Option in connection with the Offer or the Merger.
(b) At the Effective Time, each Company Warrant that
is outstanding shall be assumed by Parent to the extent required by the terms
(as in effect on the date of this Agreement) of the instrument by which such
Company Warrant is evidenced. The Company shall take all action that may be
necessary to ensure that all rights with respect to Company Common Stock under
outstanding Company Warrants shall thereupon be converted into rights with
respect to Parent Common Stock in the manner specified in such Company Warrants,
and that the holders of such Company Warrants shall have no continuing rights
against the Surviving Corporation.
6.4 EMPLOYEE MATTERS.
(a) The Company shall terminate the employment of
each employee of the Company, such termination to be effective as of immediately
following the Acceptance Date. The parties acknowledge that nothing in this
Agreement shall be construed to create a right in any employee of the Company
who continues employment with Parent or the Surviving Corporation after the
Effective Time (a "Continuing Employee") to employment with Parent, the
Surviving Corporation or any other Subsidiary of Parent, and the employment of
any Continuing Employee shall be "at will."
(b) At Parent's request, the Company agrees to take
(or cause to be taken) all actions necessary or appropriate to terminate,
effective immediately prior to the acceptance for exchange of shares of Company
Capital Stock pursuant to the Offer or the Effective Time, any employee benefit
plan sponsored by the Company (or in which the Company participates) that
contains a cash or deferred arrangement intended to qualify under Section 401(k)
of the Code.
6.5 INDEMNIFICATION OF EXECUTIVE OFFICERS AND DIRECTORS.
Subject to any limitations imposed by the Xxxxxxxx-Xxxxx Act of 2002, all rights
to indemnification existing in
43.
favor of those Persons who are directors and executive officers of the Company
as of the date of this Agreement (the "Indemnified Persons") for their acts and
omissions as directors and officers of the Company occurring prior to the
Effective Time, as provided in the Company's bylaws and certificate of
incorporation (as in effect as of the date of this Agreement) and as provided in
the indemnification agreements between the Company and said Indemnified Persons
(as in effect as of the date of this Agreement) listed in Part 6.5 of the
Company Disclosure Schedule, shall survive the Merger and shall be observed by
the Surviving Corporation to the fullest extent available under
Delaware law for
a period of five years from the Effective Time.
6.6 ADDITIONAL AGREEMENTS.
(a) Subject to Section 6.6(b), Parent and the Company
shall use commercially reasonable efforts to take, or cause to be taken, all
actions necessary to consummate the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, but subject to Section 6.6(b),
each party to this Agreement (i) shall make all filings (if any) and give all
notices (if any) required to be made and given by such party in connection with
the Offer and the Merger and the other transactions contemplated by this
Agreement, (ii) shall use commercially reasonable efforts to obtain each Consent
(if any) required to be obtained (pursuant to any applicable Legal Requirement
or Contract, or otherwise) by such party in connection with the Offer and the
Merger or any of the other transactions contemplated by this Agreement, and
(iii) shall use commercially reasonable efforts to lift any restraint,
injunction or other legal bar to the Offer, the Merger or any of the other
transactions contemplated by this Agreement. The Company shall promptly deliver
to Parent a copy of each such filing made, each such notice given and each such
Consent obtained by the Company during the Pre-Closing Period.
(b) Notwithstanding anything to the contrary
contained in this Agreement, Parent shall not have any obligation under this
Agreement: (i) to dispose of or transfer or cause any of its Subsidiaries to
dispose of or transfer any assets, or to commit to cause the Company to dispose
of any assets; (ii) to discontinue or cause any of its Subsidiaries to
discontinue offering any product or service, or to commit to cause the Company
to discontinue offering any product or service; (iii) to license or otherwise
make available, or cause any of its Subsidiaries to license or otherwise make
available, to any Person, any Intellectual Property or Intellectual Property
Right, or to commit to cause the Company to license or otherwise make available
to any Person any Intellectual Property or Intellectual Property Right; (iv) to
hold separate or cause any of its Subsidiaries to hold separate any assets or
operations (either before or after the Closing Date), or to commit to cause the
Company to hold separate any assets or operations; (v) to make or cause any of
its Subsidiaries to make any commitment (to any Governmental Body or otherwise)
regarding its future operations or the future operations of the Company; or (vi)
to contest any Legal Proceeding relating to the Offer, the Merger or any of the
other transactions contemplated by this Agreement if Parent determines in good
faith that contesting such Legal Proceeding might not be advisable.
6.7 DISCLOSURE. Parent and the Company shall consult with each
other before issuing any press release or otherwise making any public statement
with respect to the Offer, the Merger or any of the other transactions
contemplated by this Agreement unless Parent or the Company, as the case may be,
shall have been advised by its outside legal counsel that such
44.
consultation is prohibited by applicable law. Without limiting the generality of
the foregoing, the Company shall not, and shall not permit any Representative of
the Company to, make any disclosure to employees of the Company, to the public
or otherwise regarding the Offer, the Merger or any of the other transactions
contemplated by this Agreement unless (a) Parent shall have approved such
disclosure or (b) the Company shall have been advised by its outside legal
counsel that such disclosure is required by applicable law. Notwithstanding
anything in this Agreement or in the Confidentiality Agreement to the contrary,
any party to this Agreement (and any employee, representative, shareholder or
other agent of any party to this Agreement) may disclose to any and all Persons,
without limitation of any kind, the tax treatment and tax structure of the
transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure; provided however, that for this purpose,
(i) the "tax treatment" of a transaction means the purported or claimed federal
income tax treatment of the transaction, and (ii) the "tax structure" of a
transaction means any fact that may be relevant to understanding the purported
or claimed federal income tax treatment of the transaction. Parent and the
Company acknowledge and agree that (A) the tax treatment and tax structure of
any transaction contemplated by this Agreement does not include the name of any
party to such transaction or any sensitive business information (including,
specific information about any party's intellectual property or other
proprietary assets) unless such information may be related or relevant to the
purported or claimed federal income tax treatment of such transaction, and (B)
notwithstanding anything to the contrary herein, this Agreement contains no
restrictions on the ability of either Parent or the Company to consult with any
(or multiple) legal or tax advisors for legal or tax advice regarding the tax
treatment or tax structure of any transaction contemplated by this Agreement, or
to disclose the tax treatment or tax structure of any transaction contemplated
by this Agreement to federal and state taxing authorities.
6.8 LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall use
commercially reasonable efforts to cause to be delivered to Parent a letter of
Ernst & Young LLP, dated no more than two business days before the date on which
the Registration Statement becomes effective (and reasonably satisfactory in
form and substance to Parent), that is customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
6.9 LISTING. Parent shall use commercially reasonable efforts
to cause the shares of Parent Common Stock being issued in the Offer and in the
Merger to be approved for listing (subject to notice of issuance) on The Nasdaq
National Market.
6.10 AFFILIATE AGREEMENTS. The Company shall use commercially
reasonable efforts to cause each of its directors and officers to execute and
deliver to Parent, as promptly as practicable after the execution of this
Agreement, an Affiliate Agreement in the form of Exhibit B.
6.11 SECTION 16 MATTERS. Prior to the Effective Time, the
Company shall take such reasonable steps as are required to cause the
disposition of Company Capital Stock and Company Options in connection with the
Merger by each director and officer of the Company to be exempt from Section
16(b) of the Exchange Act pursuant to Rule 16b-3 under the Exchange Act. If the
Company delivers the Section 16 Information (as defined below) to Parent at
least 30
45.
days prior to the Effective Time, then, prior to the Effective Time, Parent
shall take such reasonable steps as are required to cause the acquisition of
Parent Common Stock and options to purchase shares of Parent Common Stock in
connection with the Merger by each individual who, immediately after the
Effective Time, will become subject to the reporting requirements of Section
16(a) of the Exchange Act with respect to Parent to be exempt from Section 16(b)
of the Exchange Act pursuant to Rule 16b-3 under the Exchange Act. For purposes
of this Section 6.11, "Section 16 Information" shall mean the following
information for each individual who, immediately after the Effective Time, will
become subject to the reporting requirements of Section 16(a) of the Exchange
Act with respect to Parent: (a) the number of shares of Company Capital Stock
held by such individual and expected to be exchanged for shares of Parent Common
Stock in the Merger; and (b) the number of Company Options held by such
individual and expected to be converted into options to purchase shares of
Parent Common Stock in connection with the Merger.
SECTION 7. CONDITIONS PRECEDENT TO THE MERGER
The obligations of the parties to effect the Merger are subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions:
7.1 STOCKHOLDER APPROVAL. If required by applicable law in
order to consummate the Merger, this Agreement shall have been duly adopted by
the Required Company Stockholder Vote.
7.2 NO RESTRAINTS. No temporary restraining order, preliminary
or permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement and the Post-Effective Amendment shall have become effective in
accordance with the provisions of the Securities Act, and no stop order shall
have been issued, and no proceeding for that purpose shall have been initiated
or be threatened, by the SEC with respect to the Registration Statement or the
Post-Effective Amendment.
7.4 CONSUMMATION OF OFFER. Acquisition Sub shall have accepted
for exchange all shares of Company Capital Stock validly tendered (and not
withdrawn) pursuant to the Offer, and shall have issued and delivered all shares
of Parent Common Stock required to be delivered in exchange for such shares of
Company Common Stock.
SECTION 8. TERMINATION
8.1 TERMINATION. This Agreement may be terminated:
(a) by mutual written consent of Parent and the
Company at any time prior to the Effective Time;
46.
(b) by either Parent or the Company at any time prior
to the Effective Time if a court of competent jurisdiction or other Governmental
Body shall have issued a final and nonappealable order, decree or ruling, or
shall have taken any other action, having the effect of (i) permanently
restraining, enjoining or otherwise prohibiting the acquisition or acceptance
for exchange of, or the issuance and delivery of shares of Parent Common Stock
in exchange for, any shares of Company Capital Stock pursuant to the Offer or
the consummation of the Merger or (ii) making the acquisition of, or delivery of
consideration for, any shares of Company Capital Stock pursuant to Offer or the
consummation of the Merger illegal;
(c) by either Parent or the Company at any time prior
to the Acceptance Date if the Offer shall have expired without the acceptance
for exchange of shares of Company Capital Stock; provided, however, that a party
shall not be permitted to terminate this Agreement pursuant to this Section
8.1(c) if the failure to accept shares of Company Capital Stock for exchange
pursuant to the Offer is attributable to a failure on the part of such party to
perform any covenant in this Agreement required to be performed by such party on
or prior to the Acceptance Date;
(d) by either Parent or the Company at any time prior
to the Acceptance Date if the acceptance of shares of Company Capital Stock for
exchange pursuant to the Offer shall not have occurred on or prior to the close
of business on November 15, 2003; provided, however, that a party shall not be
permitted to terminate this Agreement pursuant to this Section 8.1(d) if the
failure of the acceptance for exchange of shares of Company Capital Stock
pursuant to the Offer by the close of business on November 15, 2003 is
attributable to a failure on the part of such party to perform any covenant in
this Agreement required to be performed by such party on or prior to the
Acceptance Date;
(e) by Parent at any time prior to the Acceptance
Date if a Triggering Event shall have occurred;
(f) by Parent at any time prior to the Acceptance
Date if: (i) any of the Company's representations and warranties contained in
this Agreement shall be inaccurate as of the date of this Agreement or shall
have become inaccurate as of a date subsequent to the date of this Agreement (as
if made on such subsequent date), in either case such that the condition set
forth in clause "(a)" of Annex II would not be satisfied (it being understood
that, for purposes of determining the accuracy of such representations and
warranties as of the date of this Agreement or as of any subsequent date, (A)
all "Material Adverse Effect" qualifications and other materiality
qualifications, and any similar qualifications, contained in such
representations and warranties shall be disregarded and (B) any update of or
modification to the Company Disclosure Schedule made or purported to have been
made after the date of this Agreement shall be disregarded); or (ii) any of the
Company's covenants contained in this Agreement shall have been breached such
that the condition set forth in clause "(b)" of Annex II would not be satisfied;
(g) by the Company at any time prior to the
Acceptance Date if: (i) Parent's representations and warranties contained in
this Agreement shall be materially inaccurate as of the date of this Agreement,
or shall have become materially inaccurate as of a date subsequent to the date
of this Agreement (as if made on such subsequent date); or (ii) Parent
47.
shall not have complied in all material respects with Parent's covenants
contained in this Agreement;
(h) by Parent if since the date of this Agreement
(but on or prior to the Acceptance Date): (i) a Material Adverse Effect shall
have occurred; or (ii) any event shall have occurred or circumstance shall have
arisen that, in combination with any other events or circumstances, could
reasonably be expected to have or give rise to a Material Adverse Effect;
(i) by the Company at any time prior to the
Acceptance Date, in order to accept a Superior Offer and enter into the
Specified Agreement (as defined below) relating to such Superior Offer, if (i)
neither the Company nor any Representative of the Company shall have breached or
taken any action inconsistent with any of the provisions set forth in Section
5.3, (ii) the board of directors of the Company, after satisfying all of the
requirements set forth in Section 1.2(b) and otherwise causing the Company to
comply in all material respects with the provisions of this Agreement, shall
have authorized the Company to enter into a binding written definitive
acquisition agreement providing for the consummation of a transaction
constituting a Superior Offer (the "Specified Agreement"), (iii) the Company
shall have delivered to Parent a written notice (that includes a copy of the
Specified Agreement as an attachment) containing the Company's representation
that the Specified Agreement has been duly executed and delivered to the Company
by the other party thereto, that the board of directors of the Company has
authorized the execution and delivery of the Specified Agreement on behalf of
the Company and that the Company will enter into the Specified Agreement
immediately upon termination of this Agreement pursuant to this Section 8.1(i),
(iv) a period of at least five business days shall have elapsed since the
receipt by Parent of such notice, and the Company shall have made its
Representatives reasonably available during such period for the purpose of
engaging in negotiations with Parent regarding a possible amendment of the Offer
or a possible alternative transaction and (v) any proposal by Parent to amend
the Offer or enter into an alternative transaction shall have been considered by
the board of directors of the Company in good faith, and the Company's board of
directors shall have determined in good faith (after having taken into account
the advice of the Company's outside legal counsel and the advice of Petkevich or
another independent financial advisor of at least reasonably equivalent
reputation) that the terms of the proposed amended Offer (or other alternative
transaction) are not as favorable to the Company's stockholders, from a
financial point of view, as the transaction contemplated by the Specified
Agreement; or
(j) by Parent if (i) the holders of a majority of the
issued and outstanding shares of Company Capital Stock (other than Parent) have
taken action by written consent to elect any individual to serve as a member of
the Company's board of directors in accordance with the DGCL or any other
applicable Legal Requirement or (ii) two or more of the individuals who
currently serve on the Company's board of directors as of the date of this
Agreement no longer serve on the Company's board of directors for any reason
(other than as a result of the operation of Section 1.3(a)).
48.
8.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement as provided in Section 8.1, this Agreement shall be of no further
force or effect; provided, however, that (i) this Section 8.2, Section 8.3 and
Section 9 (and the Confidentiality Agreement) shall survive the termination of
this Agreement and shall remain in full force and effect, (ii) the termination
of this Agreement shall not relieve any party from any liability for any knowing
or willful breach of any representation or warranty or any breach of any
covenant, obligation or other provision contained in this Agreement (it being
understood that in the event of the termination of this Agreement as provided in
Section 8.1, in no event shall the Company have any liability to Parent for any
breach of any covenant contained in this Agreement to the extent such breach
occurs after the Acceptance Date during the period of time in which a majority
of the individuals then serving as members of the board of directors of the
Company were designated by Parent to serve as directors pursuant to Section 1.3)
and (iii) no termination of this Agreement shall in any way affect any of the
parties' rights or obligations with respect to any shares of Company Capital
Stock accepted for exchange pursuant to the Offer prior to such termination.
8.3 EXPENSES.
(a) Except as set forth in this Section 8.3, all fees
and expenses incurred in connection with this Agreement and the Offer, the
Merger and the other transactions contemplated by this Agreement shall be paid
by the party incurring such expenses, whether or not any shares of Company
Capital Stock are purchased pursuant to the Offer and whether or not the Merger
is consummated; provided, however, that Parent and the Company shall share
equally all fees and expenses, other than attorneys' fees, incurred in
connection with the filing, printing and mailing of the Registration Statement,
the Offer Documents and the Proxy Statement and any amendments or supplements
thereto.
(b) If (A) this Agreement is terminated by the
Company pursuant to Section 8.1 or by Parent pursuant to Section 8.1(e) and (B)
within 180 days after the date of termination of this Agreement, (1) a Superior
Transaction is consummated, (2) the Company enters into an agreement
contemplating a Superior Transaction or (3) an offer or proposal contemplating a
Superior Transaction shall have been disclosed, announced, commenced, submitted
or made, then the Company shall make a nonrefundable cash payment to Parent,
contemporaneously with the consummation of a Superior Transaction, in an amount
equal to the lesser of (y) $500,000 or (z) a dollar amount equal to 40% of the
amount by which the aggregate value of such Superior Transaction exceeds the
aggregate value of the shares of Parent Common Stock that would otherwise have
been issued by Parent in connection with the Offer and the Merger.
(c) If Parent or the Company fails to pay when due
any amount payable under this Section 8.3, then (i) such party shall reimburse
the other party for all costs and expenses (including fees and disbursements of
counsel) incurred in connection with the collection of such overdue amount and
the enforcement by such other party of its rights under this Section 8.3, 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 such other party in full) at a rate per annum three percentage points over
the "prime rate" (as announced by Bank of America
49.
or any successor thereto) in effect on the date such overdue amount was
originally required to be paid.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 AMENDMENT. Subject to Section 1.3, this Agreement may be
amended with the approval of the respective boards of directors of the Company
and Parent at any time. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
9.2 WAIVER. 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. 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.
9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Merger.
9.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the
other agreements referred to herein 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. 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
9.5 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 thereof. In any action between any of the
parties arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement: (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 States of Delaware; (b) if any such
action is properly commenced in a state court, then, subject to applicable law,
no party shall object to the removal of such action to any federal court located
in the same state; and (c) each of the parties irrevocably waives the right to
trial by jury.
9.6 DISCLOSURE SCHEDULE. The Company Disclosure Schedule shall
be arranged in separate parts corresponding to the numbered and lettered
sections contained in Sections 3, 5 and 6, and the information disclosed in any
numbered or lettered part shall be deemed to relate to and to qualify only the
particular representation, warranty or covenant set
50.
forth in the corresponding numbered or lettered section in Section 3, 5 or 6,
and shall not be deemed to relate to or to qualify any other representation,
warranty or covenant. For purposes of this Agreement, each statement or other
item of information included in the Company Disclosure Schedule shall be deemed
to be a representation and warranty of the Company contained in this Agreement.
9.7 TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement.
9.8 ASSIGNABILITY. 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 the Company's rights hereunder may be assigned by the
Company without the prior written consent of Parent, and any attempted
assignment of this Agreement or any of such rights by the Company without such
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) any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
9.9 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 (a) upon receipt when
delivered by hand, or (b) two business days after sent by registered mail or by
courier or express delivery service or by facsimile, provided that in each case
the notice or other communication is sent to the address or facsimile telephone
number set forth beneath the name of such party below (or to such other address
or facsimile telephone number as such party shall have specified in a written
notice given to the other parties hereto):
if to Parent or Acquisition Sub:
AVI BioPharma, Inc.
Xxx XX Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Godward LLP
000 Xxxxxxxxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
51.
if to the Company:
eXegenics Inc.
0000 Xxxxxxxx Xxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, President and CEO
Facsimile: (000) 000-0000
With a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Chrysler Center
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
9.10 COOPERATION. The parties agree to cooperate fully with
one another and to execute and deliver such further documents, certificates,
agreements and instruments and to take such other actions as may be reasonably
requested by the other to evidence or reflect the transactions contemplated by
this Agreement and to carry out the intent and purposes of this Agreement.
9.11 SEVERABILITY. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
9.12 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."
52.
(d) Except as otherwise indicated, all references in
this Agreement to "Sections," "Exhibits" and "Annexes" are intended to refer to
Sections of this Agreement and Exhibits or Annexes to this Agreement.
(e) 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.
53.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
AVI BIOPHARMA, INC.
By:
----------------------------------------
ELK ACQUISITION, INC.
By:
----------------------------------------
EXEGENICS INC.
By:
----------------------------------------
54.
ANNEX I
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Annex I and Annex II):
ACCEPTANCE DATE. "Acceptance Date" shall mean the first date on which
Acquisition Sub accepts any shares of Company Capital Stock for exchange
pursuant to the Offer.
ACCRUED LIABILITY. "Accrued Liability" shall mean any obligation or
other liability of the Company of a type that could reasonably be expected to be
reflected on a balance sheet prepared in accordance with generally accepted
accounting principles as of the date of such balance sheet.
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer,
proposal, inquiry or indication of interest (other than an offer, proposal,
inquiry or indication of interest made or submitted by Parent) contemplating or
otherwise relating to any Acquisition Transaction.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction or series of transactions involving:
(a) any merger, consolidation, amalgamation, share exchange,
business combination, issuance of securities, acquisition of
securities, recapitalization, tender offer, exchange offer or other
similar transaction (i) in which the Company or a subsidiary of the
Company is a constituent corporation, (ii) in which a Person or "group"
(as defined in the Exchange Act and the rules thereunder) of Persons
directly or indirectly acquires beneficial or record ownership of
securities representing more than 15% of the issued and outstanding
securities of any class of voting securities of the Company, or (iii)
in which the Company issues securities representing more than 15% of
the issued and outstanding securities of any class of voting securities
of the Company;
(b) any sale, lease, exchange, transfer, license, acquisition
or disposition of any business or businesses or assets that constitute
or account for 15% or more of the net revenues, net income or assets of
the Company; or
(c) any liquidation or dissolution of the Company.
ADJUSTED OUTSTANDING SHARE NUMBER. "Adjusted Outstanding Share Number"
shall mean the sum of: (a) the aggregate number of shares of Company Capital
Stock issued and outstanding immediately prior to the acceptance of shares of
Company Capital Stock for exchange pursuant to the Offer, plus (b) at the
election of Parent, an additional number of shares up to but not exceeding the
aggregate number of shares of Company Capital Stock issuable upon the exercise
of outstanding in-the-money options, warrants and other rights to acquire
capital stock of the Company.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger to
which this Annex I is attached, as it may be amended from time to time.
1.
COBRA. "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMMON EXCHANGE RATIO. "Common Exchange Ratio" shall mean a fraction of
a share of Parent Common Stock (subject to adjustment pursuant to Sections
1.1(e) and 2.5(b) of the Agreement) equal to 0.103.
COMPANY AFFILIATE. "Company Affiliate" shall mean any Person under
common control with the Company within the meaning of Sections 414(b), 414(c),
414(m) and 414(o) of the Code, and the regulations issued thereunder.
COMPANY CAPITAL STOCK. "Company Capital Stock" shall mean the Company
Common Stock and the Company Preferred Stock.
COMPANY COMMON STOCK. "Company Common Stock" shall mean the Common
Stock, $0.01 par value per share, of the Company.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which the Company is a party; (b) by which the Company or any asset of the
Company is or may become bound or under which the Company has, or may become
subject to, any obligation; or (c) under which the Company has or may acquire
any right or interest.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall mean
the disclosure schedule that has been prepared by the Company in accordance with
the requirements of Section 9.6 of the Agreement and that has been delivered by
the Company to Parent on the date of the Agreement and signed by the Chief
Executive Officer and the Chief Financial Officer of the Company.
COMPANY EMPLOYEE. "Company Employee" shall mean any current or former
employee, independent contractor or director of the Company or any Company
Affiliate.
COMPANY EMPLOYEE AGREEMENT. "Company Employee Agreement" shall mean
each management, employment, severance, consulting, relocation, repatriation or
expatriation agreement or other Contract between the Company or any Company
Affiliate and any Company Employee, other than any such management, employment,
severance, consulting, relocation, repatriation or expatriation agreement or
other Contract with a Company Employee which is terminable "at will" without any
obligation on the part of the Company or any Company Affiliate to make any
payment or provide any benefit in connection with such termination.
COMPANY EMPLOYEE PLAN. "Company Employee Plan" shall mean any plan,
program, policy, practice, Contract or other arrangement providing for
compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related award, fringe benefit or other employee benefit
or remuneration of any kind, whether written, unwritten or otherwise, funded or
unfunded, including each "employee benefit plan," within the meaning of Section
3(3) of ERISA (whether or not ERISA is applicable to such plan), that is or has
been
2.
maintained, contributed to, or required to be contributed to, by the Company or
any Company Affiliate for the benefit of any Company Employee, or with respect
to which the Company or any Company Affiliate has or may have any liability or
obligation, except such definition shall not include any Company Employee
Agreement.
COMPANY IP. "Company IP" shall mean all Intellectual Property Rights
and Intellectual Property in which the Company has (or purports to have) an
ownership interest or an exclusive license or similar exclusive right.
COMPANY IP CONTRACT. "Company IP Contract" shall mean any Contract to
which the Company is or was a party or by which the Company is or was bound,
that contains any assignment or license of, or any covenant not to assert or
enforce, any Intellectual Property Right or that otherwise relates to any
Company IP or any Intellectual Property developed by, with or for the Company.
COMPANY PENSION PLAN. "Company Pension Plan" shall mean each Company
Employee Plan that is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
COMPANY PREFERRED STOCK. "Company Preferred Stock" shall mean the
Preferred Stock, $0.01 par value per share, of the Company.
COMPANY OPTIONS. "Company Options" shall mean options to purchase
shares of Company Capital Stock (whether granted by the Company pursuant to the
Company's stock option plans, assumed by the Company in connection with any
merger, acquisition or similar transaction or otherwise issued or granted).
COMPANY RETURNS. "Company Returns" shall mean each of the Tax Returns
required to be filed by or on behalf of the Company with any Governmental Body
with respect to any taxable period ending on or before the Closing Date.
COMPANY SEC DOCUMENTS. "Company SEC Documents" shall mean all
registration statements, proxy statements and other statements, reports,
schedules, forms and other documents (including all certifications and
statements required by (a) Rule 13a-14 or Rule 15d-14 under the Exchange Act or
(b) Section 906 of the Xxxxxxxx-Xxxxx Act of 2002 with respect to any document
referred to above) filed by the Company with, or furnished by the Company to,
the SEC since July 1, 2001, and all amendments thereto.
COMPANY WARRANT. "Company Warrant" shall mean a warrant to purchase
shares of Company Capital Stock.
CONFIDENTIALITY AGREEMENT. "Confidentiality Agreement" shall mean that
certain Confidentiality Agreement dated as of June 20, 2003 between Parent and
the Company.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, option, warranty,
purchase order, license,
3.
sublicense, insurance policy, benefit plan or legally binding commitment or
undertaking of any nature.
DGCL. "DGCL" shall mean the Delaware General Corporation Law.
DOL. "DOL" shall mean the United States Department of Labor.
ENCUMBRANCE. "Encumbrance" shall mean 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 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. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, 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.
ENVIRONMENTAL LAW. "Environmental Law" shall mean 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 Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
EXCESS CASH AMOUNT. "Excess Cash Amount" shall mean, as of any given
date, the amount by which (a) the aggregate dollar amount of all cash and cash
equivalents (excluding any restricted cash of the Company and excluding the
aggregate dollar amount of all amounts paid to the Company after the date of
this Agreement in connection with the exercise of any outstanding options or
warrants to purchase Company Capital Stock) exceeds (b) the sum of (i) the
aggregate dollar amount of all Accrued Liabilities plus (ii) the maximum
aggregate dollar amount of all Potential Liabilities (as adjusted to account for
any decreases in such amount agreed to by the Company and Parent as of the date
of this Agreement and set forth on the Projected Cash Disbursement Schedule).
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
FMLA. "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended.
4.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, permission, variance,
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. "Governmental Body" shall mean 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; or (c) governmental or quasi-governmental authority 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).
HIPAA. "HIPAA" shall mean the Health Insurance Portability and
Accountability Act of 1996, as amended.
INTELLECTUAL PROPERTY. "Intellectual Property" shall mean algorithms,
apparatus, assay components, biological materials, cell lines, clinical data,
chemical compositions or structures, databases, data collections, diagrams,
formulae, inventions (whether or not patentable), know-how, logos, marks
(including brand names, product names, logos, and slogans), methods, network
configurations and architectures, processes, proprietary information, protocols,
schematics, specifications, software, techniques, URLs, web sites, works of
authorship and other forms of technology (whether or not embodied in any
tangible form and including all tangible embodiments of the foregoing, such as
instruction manuals, laboratory notebooks, prototypes, samples, studies and
summaries).
INTELLECTUAL PROPERTY RIGHTS. "Intellectual Property Rights" shall mean
all past, present, and future rights of the following types, which may exist or
be created under the laws of any jurisdiction in the world: (a) rights
associated with works of authorship, including exclusive exploitation rights,
copyrights, moral rights and mask works; (b) trademark and trade name rights and
similar rights; (c) trade secret rights; (d) patent and industrial property
rights; (e) other proprietary rights in Intellectual Property; and (f) rights in
or relating to registrations, renewals, extensions, combinations, divisions, and
reissues of, and applications for, any of the rights referred to in clauses
"(a)" through "(e)" above.
LEGAL PROCEEDING. "Legal Proceeding" shall mean 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. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign 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 (or under the
authority of The Nasdaq National Market).
5.
MATERIAL ADVERSE EFFECT. "Material Adverse Effect" means any effect,
change, development, event or circumstance that (considered together with all
other effects, changes, developments, events or circumstances) is or could
reasonably be expected to be materially adverse to, or has or could reasonably
be expected to have a material adverse effect on (a) the business, condition
(financial or otherwise), cash position, liquidity, working capital,
capitalization, assets (tangible or intangible), liabilities (fixed, contingent
or otherwise), operations, cash flow, financial performance or prospects of the
Company, (b) the ability of the Company to consummate the Merger or any of the
other transactions contemplated by the Agreement or to perform any of its
obligations under the Agreement, or (c) Parent's ability to vote, receive
dividends with respect to or otherwise exercise ownership rights with respect to
the stock of the Surviving Corporation; provided, however, that that certain
Legal Proceeding captioned M&B Xxxxx Family Limited Partnership of 1996 vs.
Xxxxxx X. Xxxxx, et al., Civil Action No. 20303-NC, in the Court of Chancery of
the State of Delaware shall not constitute in and of itself a Material Adverse
Effect, except to the extent there shall have been a material adverse
development in such Legal Proceeding or any material adverse expansion in the
claims or causes of action included in such Legal Proceeding.
MATERIALS OF ENVIRONMENTAL CONCERN. "Materials of Environmental
Concern" shall include chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum and petroleum products and any other substance that is now
or hereafter regulated by any Environmental Law or that is otherwise a danger to
health, reproduction or the environment.
PARENT COMMON STOCK. "Parent Common Stock" shall mean the common stock,
par value $0.0001 per share, of Parent.
PARENT SEC DOCUMENTS. "Parent SEC Documents" shall mean each report,
registration statement and definitive proxy statement filed by Parent with the
SEC between January 1, 2003 and the date of the Agreement.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
POST-EFFECTIVE AMENDMENT. "Post-Effective Amendment" shall mean a
post-effective amendment to the Registration Statement for the offer and sale of
shares of Parent Common Stock in connection with the Merger and in which the
Proxy Statement shall be included as a prospectus.
POTENTIAL LIABILITY. "Potential Liability" means any obligation or
other liability of the Company (whether due or to become due) of any nature that
is not an Accrued Liability, including (i) any such obligation or other
liability that is undetermined in dollar amount or that is unliquidated,
unmatured or contingent in nature and (ii) any such obligation or other
liability that exists or may arise in connection with any of the matters
reflected in the Projected Cash Disbursement Schedule or in connection with any
Company Contract or (iii) any such obligation or other liability that exists or
may arise in connection with any claim, Legal Proceeding (other than that
certain Legal Proceeding captioned M&B Xxxxx Family Limited Partnership of 1996
vs. Xxxxxx X. Xxxxx, et al., Civil Action No. 20303-NC, in the Court of Chancery
of the State of Delaware, except to the extent there shall have been a material
adverse development in such Legal Proceeding or any material adverse expansion
in the claims or causes of action included in
6.
such Legal Proceeding) or other event or circumstance that could give rise to an
Accrued Liability or a liability of the type described in clause "(i)" or clause
"(ii)" of this sentence.
PREFERRED EXCHANGE RATIO. "Preferred Exchange Ratio" shall mean the
fraction of a share of Parent Common Stock (subject to adjustment pursuant to
Sections 1.1(e) and 2.5(b) of the Agreement) determined by multiplying the
Common Exchange Ratio by 1.5.
PROXY STATEMENT. "Proxy Statement" shall mean the proxy or information
statement of the Company to be sent to the Company's stockholders in connection
with the Company Stockholders' Meeting.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
RIGHTS. "Rights" shall mean rights issued to holders of Company Common
Stock pursuant to the Rights Agreement.
RIGHTS AGREEMENT. "Rights Agreement" shall mean the Stockholder Rights
Agreement, dated as of June 9, 2003, between the Company and American Stock
Transfer & Trust Company, as Rights Agent.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
SUBSIDIARY. An Entity shall be deemed to be a "Subsidiary" of another
Person if such 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 a majority of
the members of such Entity's board of directors or other governing body, or (b)
at least 50% of the outstanding equity or financial interests of such Entity.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party unaffiliated with the Company to acquire (by
way of merger, tender offer or otherwise) of all of the outstanding shares of
Company Capital Stock or all or substantially all of the assets of the Company,
in any such case, on terms that the board of directors of the Company
determines, in its reasonable judgment, based upon a written opinion of
Petkevich or another independent financial advisor of at least reasonably
equivalent reputation, to be more favorable to the Company's stockholders than
the terms of the Offer or the Merger; provided, however, that any such offer
shall not be deemed to be a "Superior Offer" if 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.
SUPERIOR TRANSACTION. "Superior Transaction" shall mean an acquisition
(by way of merger, tender offer or otherwise) of at least 85% of the issued and
outstanding shares of Company Capital Stock or all or substantially all of the
assets of the Company in which the aggregate value of such acquisition exceeds
the aggregate value of the shares of Parent Common Stock that would otherwise
have been issued by Parent in connection with the Offer and the
7.
Merger. For purposes of this definition and Section 8.3(b): (a) the aggregate
value of any Superior Transaction shall be determined by multiplying (i) the
consideration paid (including the value of any consideration payable upon the
exercise of outstanding options or warrants to acquire Company Capital Stock and
the value of any contingent or deferred consideration that may become payable in
connection with such acquisition) to the Company and its securityholders in
connection with such acquisition by (ii) a fraction, the numerator of which is
100% and the denominator of which is (A) with respect to any acquisition of the
issued and outstanding shares of Company Capital Stock, the percentage of the
issued and outstanding shares of Company Capital Stock so acquired and (B) with
respect to any acquisition of assets of the Company, the percentage of the book
value of the assets so acquired; (b) the aggregate value of any security to be
paid as consideration in any such Superior Transaction shall be determined by
multiplying the total number of shares or other units of such security to be
issued in connection with such Superior Transaction by the average of the
closing prices of such security reported on the principal market on which such
security is traded for the 30 consecutive trading days ending two trading days
prior to the consummation of such Superior Transaction (it being understood that
if such security is not publicly traded, then the aggregate value of any such
security shall be determined by multiplying the total number of shares or other
units of such security to be issued in connection with such Superior Transaction
by the fair market value of a share or unit of such security on the date of
consummation of such Superior Transaction); and (c) the aggregate value of the
shares of Parent Common Stock that would have otherwise been issued in
connection with the Offer and the Merger shall be equal to $10,757,000.
TAX. "Tax" shall mean any 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 or payroll tax), levy, assessment, tariff, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
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.
TRIGGERING EVENT. A "Triggering Event" shall be deemed to have occurred
if: (a) the board of directors of the Company shall have failed to unanimously
recommend that the Company's stockholders accept the Offer, tender their shares
of Company Capital Stock pursuant to the Offer and (if required by applicable
law in order to consummate the Merger) vote to adopt the Agreement, or shall
have withdrawn or modified in a manner adverse to Parent the Company Board
Recommendation; (b) the Company shall have failed to include in the Offer
Documents the Company Board Recommendation or a statement to the effect that the
board of directors of the Company has determined and believes that the Offer and
the Merger are fair to and in the best interests of the holders of Company
Common Stock and the holders of Company Preferred Stock; (c) the board of
directors of the Company fails to reaffirm the Company Board Recommendation, or
fails to reaffirm its determination that the Offer and the Merger are fair to
8.
and in the best interests of the holders of Company Common Stock and the holders
of Company Preferred Stock, within five business days after Parent requests in
writing that such recommendation or determination be reaffirmed; (d) the board
of directors of the Company shall have approved, endorsed or recommended any
Acquisition Proposal; (e) the Company shall have entered into any letter of
intent or similar document or any Contract relating to any Acquisition Proposal;
(f) a tender or exchange offer relating to securities of the Company shall have
been commenced by any Person other than Acquisition Sub, and (i) the Company
shall not have sent to its securityholders, within ten business days after the
commencement of such tender or exchange offer, a statement disclosing that the
Company recommends rejection of such tender or exchange offer or (ii) the
Company withdraws or modifies its recommendation that such tender or exchange
offer be rejected; (g) an Acquisition Proposal is publicly announced, and the
Company (i) fails to issue a press release announcing its opposition to such
Acquisition Proposal within five business days after such Acquisition Proposal
is announced or (ii) otherwise fails to actively oppose such Acquisition
Proposal; or (h) the Company or any Representative of the Company shall have
breached or taken any action inconsistent with any of the provisions set forth
in Section 5.3.
UNAUDITED INTERIM BALANCE SHEET. "Unaudited Interim Balance Sheet"
shall mean the unaudited balance sheet of the Company as of March 31, 2003,
included in the Company's Report on Form 10-Q for the fiscal quarter ended March
31, 2003, as filed with the SEC on May 13, 2003.
9.
ANNEX II
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or the Agreement,
Acquisition Sub shall not be required to accept for exchange or deliver any
consideration in exchange for, and may delay the acceptance for exchange or the
delivery of consideration in exchange for, any tendered shares of Company
Capital Stock, and may terminate the Offer on any scheduled expiration date and
not accept for exchange any tendered shares of Company Capital Stock, if (i) the
Minimum Condition shall not have been satisfied by 12:00 midnight, Eastern Time,
on the expiration date of the Offer, or (ii) any of the following additional
conditions shall not have been satisfied:
(a) the representations and warranties of the Company
contained in the Agreement shall have been accurate in all material
respects as of the date of the Agreement and shall be accurate in all
material respects as of the expiration date of the Offer (as it may
have been extended) as if made on and as of such expiration date (it
being understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect"
qualifications and other materiality qualifications contained in such
representations and warranties shall be disregarded and (ii) any update
of or modification to the Company Disclosure Schedule made or purported
to have been made after the date of the Agreement shall be
disregarded);
(b) each covenant or obligation that the Company is required
to comply with or to perform on or prior to the Acceptance Date shall
have been complied with and performed in all material respects;
(c) since the date of the Agreement, there shall not have been
any Material Adverse Effect, and no event shall have occurred or
circumstance shall exist that, in combination with any other events or
circumstances, could reasonably be expected to have or give rise to a
Material Adverse Effect;
(d) all material Consents required to be obtained in
connection with the Offer, the Merger or the other transactions
contemplated by the Agreement (including the Consents, if any,
identified in Part 3.26 of the Company Disclosure Schedule) shall have
been obtained and shall be in full force and effect;
(e) the Excess Cash Amount as of the expiration date of the
Offer (as it may have been extended) shall be at least $9,000,000;
(f) Parent and the Company shall have received each of the
following agreements and documents, each of which shall be in full
force and effect: (i) Affiliate Agreements in the form of Exhibit B,
executed by each of the directors and officers of the Company; and (ii)
a certificate executed by the Company's Chief Executive Officer and
Chief Financial Officer confirming that the conditions set forth in
clauses "(a)," "(b)," "(c)," "(d)" and "(e)" of this Annex II have been
duly satisfied;
(g) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
shall have been issued, and no
1.
proceeding for that purpose shall have been initiated or be threatened,
by the SEC with respect to the Registration Statement;
(h) Parent shall have received a letter addressed to Parent
from Ernst & Young LLP, dated as of a date reasonably acceptable to
Parent and reasonably satisfactory in form and substance to Parent,
updating the letter referred to in Section 6.8 of the Agreement, and
such update letter shall not have been withdrawn or modified;
(i) no temporary restraining order, preliminary or permanent
injunction or other order preventing the acquisition of, or delivery of
consideration for, shares of Company Capital Stock pursuant to the
Offer or preventing consummation of the Merger or any of the other
transactions contemplated by the Agreement shall have been issued by
any court of competent jurisdiction or other Governmental Body and
remain in effect, and there shall not be any Legal Requirement enacted
or deemed applicable to the Offer or the Merger or any of the other
transactions contemplated by the Agreement that makes the acquisition
of, or delivery of consideration for, shares of Company Capital Stock
pursuant to the Offer, or the consummation of the Merger or any of the
other transactions contemplated by the Agreement, illegal;
(j) there shall not be pending or threatened any Legal
Proceeding in which a Governmental Body is or is threatened to become a
party or is otherwise involved: (i) challenging or seeking to restrain
or prohibit the acquisition of, or delivery of consideration for,
shares of Company Capital Stock pursuant to the Offer or the
consummation of the Merger or any of the other transactions
contemplated by the Agreement; (ii) relating to the Offer, the Merger
or any of the other transactions contemplated by the Agreement and
seeking to obtain from Parent or the Company any damages or other
relief that may be material to Parent or the Company; (iii) seeking to
prohibit or limit in any material respect Parent's ability to vote,
receive dividends with respect to or otherwise exercise ownership
rights with respect to the stock of the Surviving Corporation; (iv)
that could materially and adversely affect the right of Parent or the
Company to own the assets or operate the business of the Company; or
(v) seeking to compel the Company, Parent or any Subsidiary of Parent
to dispose of or hold separate any material assets as a result of the
Offer, the Merger or any of the other transactions contemplated by the
Agreement;
(k) there shall not be any pending Legal Proceeding (other
than that certain Legal Proceeding captioned M&B Xxxxx Family Limited
Partnership of 1996 vs. Xxxxxx X. Xxxxx, et al., Civil Action No.
20303-NC, in the Court of Chancery of the State of Delaware) or any
threatened Legal Proceeding in which, in the reasonable judgment of
Parent, there is a reasonable possibility of an outcome that could have
a Material Adverse Effect or a material adverse effect on Parent: (i)
challenging or seeking to restrain or prohibit the acquisition of or
delivery of consideration for, shares of Company Capital Stock pursuant
to the Offer or the consummation of the Merger or any of the other
transactions contemplated by the Agreement; (ii) relating to the Offer,
the Merger or any of the other transactions contemplated by the
Agreement and seeking to obtain from Parent or the Company any damages
or other relief that may be material to Parent or the Company; (iii)
seeking to prohibit or limit in any material respect Parent's ability
to vote,
2.
receive dividends with respect to or otherwise exercise ownership
rights with respect to the stock of the Company; (iv) that would
materially and adversely affect the right of Parent or the Company to
own the assets or operate the business of the Company; or (v) seeking
to compel the Company, Parent or any Subsidiary of Parent to dispose of
or hold separate any material assets as a result of the Offer, the
Merger or any of the other transactions contemplated by the Agreement;
(l) since the date of the Agreement, there shall not have been
a material adverse development in any Legal Proceeding pending against
the Company or any of its directors or any material adverse expansion
in the claims or causes of action included in such Legal Proceeding;
(m) no Person or "group" (as defined in the Exchange Act and
the rules thereunder) of Persons shall have acquired or agreed to
acquire directly or indirectly beneficial or record ownership of
securities representing more than 15% of the outstanding securities of
any class of voting securities of the Company;
(n) no Triggering Event shall have occurred; and
(o) the Agreement shall not have been terminated.
The foregoing conditions are for the sole benefit of Parent and Acquisition Sub
and may be waived by Parent and Acquisition Sub, in whole or in part at any time
and from time to time, in the sole discretion of Parent and Acquisition Sub.
3.
