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Exhibit A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into this
30th day of November, 1999, by and among MEDCO RESEARCH, INC., a Delaware
corporation (the "Company"), KING PHARMACEUTICALS, INC., a Tennessee corporation
("Acquiror"), and MERLIN ACQUISITION I CORP., a Delaware corporation and
wholly-owned subsidiary of Acquiror ("Merger Sub").
WHEREAS, each of the Boards of Directors of the Company, Acquiror and
Merger Sub have each determined that it is advisable, and in the best interests
of, their respective stockholders that Merger Sub, a wholly-owned subsidiary of
Acquiror, be merged with and into the Company, pursuant to and subject to the
terms and conditions of this Agreement and the Delaware General Corporation Law
("Delaware Law");
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to the willingness of Acquiror and Merger Sub to
enter into this Agreement, certain holders of common stock, par value $.001 per
share, of the Company ("Company Common Stock"), have entered into an agreement
with Acquiror (the "Voting Agreement") pursuant to which, among other things,
such holders have agreed to vote their shares of Company Common Stock in favor
of this Agreement, the Merger (as defined below) and the other transactions
contemplated by this Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to the willingness of Acquiror and Merger Sub to
enter into this Agreement, the Company and Acquiror have entered into a Stock
Option Agreement (the "Option Agreement") pursuant to which the Company has
granted to Acquiror an irrevocable option to purchase from the Company up to a
number of authorized but unissued shares of Company Common Stock representing
19.9% of the outstanding shares of Company Common Stock, upon the terms and
subject to the conditions set forth therein;
WHEREAS, for United States federal income tax purposes, it is intended that
the Merger will qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests under United States generally accepted
accounting principles ("GAAP").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.1. The Merger.
Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with Delaware Law, at the Effective Time (as defined in
Section 1.2) Merger Sub shall be merged with and into the Company (the
"Merger"). As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall
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continue as the surviving corporation of the Merger (sometimes referred to
herein as the "Surviving Corporation") and a wholly-owned subsidiary of
Acquiror.
SECTION 1.2. Effective Time.
As promptly as practicable on the Closing Date (as defined in Section 1.6),
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, as required by, and executed in accordance with the
relevant provisions of, Delaware Law and in such form as approved by Acquiror
prior to such filing (the time of the filing of the Certificate of Merger or the
time specified therein being the "Effective Time").
SECTION 1.3. Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all the rights, privileges, powers and franchises of Merger Sub
and the Company shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Merger Sub and the Company shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 1.4. Certificate of Incorporation; Bylaws.
At the Effective Time, (a) the certificate of incorporation of Merger Sub,
as in effect immediately prior to the Effective Time and as amended by the
Certificate of Merger, shall be the certificate of incorporation of the
Surviving Corporation, and (b) the bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation.
SECTION 1.5. Directors and Officers.
The directors of Merger Sub immediately prior to the Effective Time shall
be the initial directors of the Surviving Corporation, each to hold office in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation; and the officers of Merger Sub immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation.
SECTION 1.6. Closing.
Subject to the terms and conditions of this Agreement, the closing of the
Merger (the "Closing") will take place as promptly as practicable after
satisfaction of the latest to occur or, if permissible, waiver of the conditions
set forth in Article VIII hereof (the "Closing Date"), at the offices of Xxxxx &
Xxxxxxx L.L.P., 0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000, XxXxxx, Xxxxxxxx 00000,
unless another date or place is agreed to in writing by the parties hereto. It
is the intention of the parties that the Closing shall occur as soon as
practicable after the Company Stockholders Meeting.
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SECTION 1.7. Subsequent Actions.
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to continue in, vest,
perfect or confirm of record or otherwise in the Surviving Corporation its
right, title or interest in, to or under any of the rights, properties,
privileges, franchises or assets of either of its constituent corporations
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be and hereby are
directed and authorized to execute and deliver, in the name and on behalf of
either of such constituent corporations, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties, privileges, franchises or
assets in the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 1.8. Tax and Accounting Treatment of the Merger.
It is intended by the parties hereto that the Merger shall (a) constitute a
reorganization of Merger Sub and the Company within the meaning of Section
368(a) of the Code, and (b) be accounted for as a pooling of interests under
GAAP. The parties hereby adopt this Agreement as a "plan of reorganization" of
Merger Sub and the Company within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.
ARTICLE II.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. Conversion of Securities.
At the Effective Time, by virtue of the Merger and without any action on
the part of Acquiror, Merger Sub, the Company or the holders of any of the
securities referred to in this Section 2.1:
(a) Common Stock. Each share of Company Common Stock (excluding any shares
described in Section 2.1(b)) issued and outstanding immediately prior to the
Effective Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive a portion of a share of common stock, no par
value, of Acquiror ("Acquiror Common Stock") equal to the Exchange Ratio (as
defined below). The shares of Acquiror Common Stock issuable to the holders of
Company Common Stock pursuant hereto, together with the amount of cash in lieu
of fractional shares payable pursuant to Section 2.1(d), is sometimes referred
to herein, collectively, as the "Merger Consideration". All such shares of
Company Common Stock shall cease to be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate previously
evidencing any such shares shall thereafter represent only the right to receive
the Merger Consideration. Except as otherwise provided herein or by applicable
law, the holders of certificates previously evidencing such shares of Company
Common Stock outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such shares of Company Common Stock. Each such
certificate previously
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evidencing such shares of Company Common Stock shall be exchanged for the number
of shares previously evidenced by the canceled certificate upon the surrender of
such certificate in accordance with the provisions of Section 2.2 multiplied by
the Exchange Ratio.
The "Exchange Ratio" shall be as follows:
(i) if the Average Closing Price (as defined below) shall be greater
than $49.87, the Exchange Ratio shall be the quotient obtained by dividing
$34.00 by the Average Closing Price, rounded to the nearest 1/10,000;
(ii) if the Average Closing Price shall be (A) less than or equal to
$49.87 and (B) greater than or equal to $33.00, the Exchange Ratio shall be
0.6818; and
(iii) if the Average Closing Price shall be less than $33.00, the
Exchange Ratio shall be the quotient obtained by dividing $22.50 by the
Average Closing Price, rounded to the nearest 1/10,000.
"Average Closing Price" shall mean the average of the reported closing
prices per share of Acquiror Common Stock on the National Association of
Securities Dealers Automated Quotation System/National Market System ("Nasdaq")
(or the last bid price in the absence of a trade) during the twenty (20)
consecutive trading days ending with and including the third trading day
immediately preceding the date of the Company Stockholders Meeting.
(b) Treasury Stock. All shares of capital stock of the Company held in the
treasury of the Company immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof and no amount shall be
delivered or deliverable in exchange therefor.
(c) Merger Sub Stock. Each share of common stock, par value $.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one (1) duly and validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation.
(d) No Fractional Shares. No certificate or scrip representing any
fractional shares of Acquiror Common Stock shall be issued pursuant to Section
2.1(a), and other than the right to receive the cash payment pursuant to this
Section 2.1(d), any such fractional interests shall not entitle the owner
thereof to any rights as a securityholder of Acquiror. Notwithstanding any other
provision hereof, all holders of Company Common Stock otherwise entitled to
receive fractional shares of Acquiror Common Stock pursuant to Section 2.1(a)
shall be entitled to receive, in lieu thereof, cash (without interest) in an
amount equal to the product of (i) such fractional part of a share of Acquiror
Common Stock to which the holder of Company Common Stock would otherwise be
entitled under Section 2.1(a) multiplied by the closing price per share of
Acquiror Common Stock on the Closing Date. As promptly as possible after the
determination of the amount of cash to be paid to holders of fractional
interests, the Exchange Agent shall so notify Acquiror, and Acquiror shall cause
the Surviving Corporation to deposit such amount with the Exchange Agent and
shall cause the Exchange Agent to forward payments to holders of such fractional
interests subject to and in accordance with the terms hereof.
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SECTION 2.2. Exchange of Certificates.
(a) Exchange Agent. As soon as reasonably practicable after the Effective
Time, Acquiror shall deposit with Union Planters Bank or an exchange agent
designated by Acquiror and reasonably acceptable to the Company (the "Exchange
Agent"), for the benefit of the former holders of shares of Company Common Stock
(excluding any shares described in Section 2.1(b)), for issuance and payment in
accordance with this Article II (i) the shares of Acquiror Common Stock issuable
pursuant to Section 2.1(a) and (ii) cash in an amount sufficient to make payment
for fractional shares under Section 2.1(d) (such shares of Acquiror Common Stock
and cash being hereinafter referred to as the "Exchange Fund"). Acquiror shall
cause the Exchange Agent, pursuant to irrevocable instructions, to deliver
Acquiror Common Stock (and cash for fractional shares) contemplated to be paid
pursuant to Sections 2.1(a) and (d) out of the Exchange Fund. The Exchange Fund
shall not be used for any purpose other than as set forth in this Section
2.2(a).
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, Acquiror shall cause the Exchange Agent to mail to each record
holder, as of the Effective Time, of an outstanding certificate or certificates
(each a "Certificate" and collectively, the "Certificates") that immediately
prior to the Effective Time evidenced outstanding shares of Company Common Stock
(excluding any shares described in Sections 2.1(b)): (i) a form letter of
transmittal and (ii) instructions for use in effecting the surrender of the
Certificates for payment therefor. Upon surrender to the Exchange Agent of a
Certificate, together with such letter of transmittal duly executed and any
other required documents, the holder of such Certificate shall be entitled to
receive in exchange therefor the applicable amount of Merger Consideration
pursuant to Section 2.1(a) and Section 2.1(d) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(j), and
such Certificate shall forthwith be canceled. In the event of a surrender of a
Certificate representing shares of Company Common Stock which are not registered
in the transfer records of the Company under the name of the Person surrendering
such Certificate, a certificate representing the proper number of shares of
Acquiror Common Stock may be issued to a Person other than the Person in whose
name the Certificate so surrendered is registered if (x) such Certificate shall
be properly endorsed or otherwise be in proper form for transfer to the Person
surrendering such Certificate and requesting such issuance, (y) such Person
surrendering such Certificate and requesting such issuance shall pay any
transfer or other Taxes required by reason of the issuance of shares of Acquiror
Common Stock to a Person other than the registered holder of such Certificate or
shall establish to the satisfaction of Acquiror that such Taxes have been paid
or are not applicable, and (z) such Person surrendering such Certificate shall,
if required by Acquiror, have such Person's signature guaranteed by a bank,
brokerage firm or other financial intermediary that is a member of a medallion
guarantee program. Until surrendered in accordance with the provisions of this
Section 2.2, each Certificate shall represent for all purposes only the right to
receive the applicable consideration set forth in Section 2.1, without any
interest thereon.
(c) Issuances to Affiliates. Notwithstanding anything herein to the
contrary, any Certificate surrendered for exchange by any "affiliate" of the
Company (as that term is used in SEC Accounting Series Release Nos. 130 and 135
and Rule 145 of the rules and regulations of the SEC under the Securities Act)
shall not be exchanged until Acquiror shall have received a signed agreement
from such "affiliate" as provided in Section 7.11 hereof.
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(d) No Further Rights in Stock. All shares of Acquiror Common Stock issued
upon the surrender for exchange of Certificates in accordance with the terms of
Sections 2.1 and 2.2 hereof (including any cash paid pursuant to this Article
II) shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the shares of Company Common Stock theretofore represented
by such Certificates, and there shall be no further registration of transfer on
the stock transfer books of the Surviving Corporation of the shares of Company
Common Stock represented by such Certificates which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, any such Certificates
are presented to Acquiror, the Surviving Corporation or the Exchange Agent for
any reason, they shall be canceled and exchanged as provided in this Article II,
except as otherwise provided by law.
(e) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Acquiror, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Acquiror.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for one hundred
eighty (180) days after the Effective Time shall be delivered to Acquiror, upon
demand, and any holder of Company Common Stock that have not theretofore
complied with this Article II shall thereafter look only to the Acquiror for the
Merger Consideration to which such holder is entitled pursuant hereto.
(g) No Liability. Neither Acquiror nor the Surviving Corporation shall be
liable to any holder of shares of Company Common Stock for any Acquiror Common
Stock or cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Withholding of Tax. Acquiror or the Exchange Agent shall be entitled
to deduct and withhold from the applicable amount of the Merger Consideration
otherwise issuable to, and any cash payment in lieu of fractional shares
otherwise payable pursuant to this Agreement to, any former holder of Company
Common Stock such amounts as Acquiror (or any Affiliate thereof) or the Exchange
Agent are required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or foreign Tax law. To
the extent that amounts are so withheld by Acquiror (or any Affiliate thereof)
or the Exchange Agent, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the former holder of Company Common
Stock in respect of whom such deduction and withholding was made by Acquiror (or
any Affiliate thereof) or the Exchange Agent.
(i) Lost, Stolen or Destroyed Certificates. In the event any Certificate
evidencing shares of Company Common Stock shall have been lost, stolen or
destroyed, upon the making of an affidavit setting forth that fact by the Person
claiming such lost, stolen or destroyed Certificate and, if required by Acquiror
the posting by such Person of a bond in such reasonable amount as Acquiror may
direct as indemnity against any claim that may be made against Acquiror, the
Surviving Corporation or the Exchange Agent with respect to such Certificate,
Acquiror shall cause the Exchange Agent to pay to such Person the applicable
amount of the Merger Consideration with respect to such lost, stolen or
destroyed Certificate.
(j) Distributions With Respect to Unexchanged Company Common Stock. No
dividends or other distributions declared or made with respect to Acquiror
Common Stock
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with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Acquiror Common Stock
such holder is entitled to receive pursuant to Section 2.1 until such holder
shall surrender such Certificate. Subject to applicable law and the provisions
of this Article II, following the surrender of any such Certificate there shall
be paid to the record holder of the shares of Acquiror Common Stock issued in
exchange for such Certificate, without interest, at the time of such surrender,
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such shares of Acquiror Common
Stock.
SECTION 2.3. Assumption of Obligations to Issue Stock.
(a) Company Options. As of the Effective Time, (i) each outstanding option
to purchase or acquire shares of Company Common Stock (an "Option") granted
under the Company's 1989 Stock Option and Stock Appreciation Rights Plan (the
"Company Stock Option Plan") shall be converted into an option to acquire
Acquiror Common Stock as provided for in this Section 2.3(a), and (ii) each such
option shall become vested as provided for in the Company Stock Option Plan and
this Agreement. Following the Effective Time, each Option shall continue to
have, and shall be subject to, the terms and conditions of each agreement
pursuant to which such Option was subject as of the Effective Time (including
the terms and conditions of the Company Stock Option Plan), except that (i) each
Option shall be exercisable for that number of whole shares of Acquiror Common
Stock equal to the product of (A) the aggregate number of shares of Company
Common Stock for which such Option was exercisable at the Effective Time
multiplied by (B) the Exchange Ratio, provided, however, that no fractional
shares of Acquiror Common Stock shall be issued upon the exercise of any Option
converted pursuant to this Section 2.3(a), and the holder of an Option
exercisable for a fractional share of Acquiror Common Stock shall be entitled to
receive, upon exercise thereof, cash (without interest) in an amount equivalent
to the fair market value at the time of exercise of the fractional share of
Acquiror Common Stock to which such holder would otherwise be entitled; and (ii)
the exercise price per share of Acquiror Common Stock issuable pursuant to each
Option shall be equal to the exercise price per share of Company Common Stock
under such Option at the Effective Time divided by the Exchange Ratio, rounded
to the nearest whole cent. Except for changes to the Options, including the
acceleration thereof, provided for in the Company Stock Option Plan by reason of
the consummation of the transactions contemplated hereby, the assumption and
substitution of Options as provided herein shall not give the holders of such
Options additional benefits or additional (or accelerated) vesting rights which
they did not have as of the Effective Time, or relieve the holders of such
Options of any obligations or restrictions applicable to their Options or the
shares obtainable upon exercise of the Options. The adjustment provided for
herein with respect to any Options that are "incentive stock options" (as
defined in Section 422 of the Code) shall be effected in a manner that is
consistent with continued treatment of such Options as "incentive stock options"
under Section 424(a) of the Code. The Company Stock Option Plan shall be assumed
by Acquiror with respect to all outstanding Options granted under the Company
Stock Option Plan, and no further options to purchase or acquire shares of
Company Common stock or other awards or rights shall be granted under the
Company Stock Option Plan after the Effective Time. The duration and other terms
of the new options provided for in this Section 2.3(a) shall be the same as the
original Options except that all references to the Company shall be references
to Acquiror. Acquiror shall take all corporate action reasonably necessary to
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reserve for issuance a sufficient number of shares of Acquiror Common Stock for
delivery upon the exercise of the Options.
(b) Form S-8. Acquiror shall (i) within ten (10) business days after the
Effective Time, file one or more registration statements on Form S-8 (or amend
existing registration statements on Form S-8) to become effective as soon as
practicable after the Effective Time with respect to the shares of Acquiror
Common Stock subject to Options granted under the Company Stock Option Plan (as
converted pursuant to Section 2.3(a)); (ii) use commercially reasonable efforts
to maintain the effectiveness of such registration statement(s) (and maintain
the current status of the prospectus or prospectuses contained therein) for so
long as such Options remain outstanding; and (iii) within ten (10) business days
after the Effective Time, prepare and submit to Nasdaq applications covering the
shares of Acquiror Common Stock subject to such Options and use commercially
reasonable efforts to cause such securities to be approved for listing as soon
as practicable after the Effective Time, subject to official notice of issuance.
SECTION 2.4. Transfer Books.
At the Effective Time, the transfer books of the Company with respect to
all shares of capital stock and other securities of the Company shall be closed
and no further registration of transfers of such shares of capital stock shall
thereafter be made on the records of the Company. On or after the Effective
Time, if any Certificates for shares of Company Common Stock (excluding any
shares described in Section 2.1(b)) are presented to the Exchange Agent, the
Surviving Corporation or Acquiror for any reason, such Certificates shall be
canceled and exchanged as provided in this Article II, except as otherwise
provided by law.
SECTION 2.5. Certain Adjustments.
If between the date hereof and the Effective Time, the outstanding shares
of Company Common Stock or of Acquiror Common Stock shall be changed into a
different number of shares by reason of any reclassification, recapitalization,
split-up, combination or exchange of shares, or any dividend payable in stock or
other securities shall be declared thereon with a record date within such
period, the Exchange Ratio (and any other references herein to a price per share
of Acquiror Common Stock) shall be adjusted accordingly to provide the same
economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or dividend.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror and Merger Sub,
subject to the exceptions set forth in the Company's disclosure schedule (which
exceptions shall specifically identify a section, subsection or clause of a
single section or subsection hereof, as applicable, to which such exception
relates, it being understood and agreed that each such exception shall be deemed
to be disclosed both under such section, subsection or clause hereof and any
other section, subsection or clause hereof to which such disclosure reasonably
relates) that:
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SECTION 3.1. Organization and Qualification; Subsidiaries.
(a) Each of the Company and each Subsidiary (as defined below) of the
Company (each a "Company Subsidiary" and collectively, the "Company
Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. Each of the
Company and each Company Subsidiary is duly qualified to conduct its business,
and is in good standing, in each jurisdiction where the character of its
properties owned, operated or leased or the nature of its activities makes such
qualification necessary, except for such failures which have not had and would
not be reasonably likely to have a Material Adverse Effect on the Company. Each
of the Company and each Company Subsidiary has the requisite corporate power and
authority and any necessary governmental authority, franchise, license or permit
to own, operate, lease and otherwise to hold and operate its assets and
properties and to carry on its businesses as now being conducted, except for
such failures which have not had and would not be reasonably likely to have a
Material Adverse Effect on the Company. The Company has no Subsidiaries (as
defined below) other than those listed in Schedule 3.1, each of which is
wholly-owned by the Company, or any direct or indirect beneficial ownership of
any securities, equity or other ownership interest in any Person other than
those listed on Schedule 3.1.
(b) For purposes of this Agreement, a "Subsidiary" of any Person means any
corporation, partnership, joint venture or other legal entity of which such
Person (either alone or through or together with any other Subsidiary of such
Person) (i) owns, directly or indirectly, fifty percent (50%) or more of the
capital stock, partnership interests or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation, partnership, joint venture or other
legal entity; or (ii) possesses, directly or indirectly, control over the
direction of management or policies of such corporation, partnership, joint
venture or other legal entity (whether through ownership of voting securities,
by agreement or otherwise).
SECTION 3.2. Certificate of Incorporation and Bylaws.
The Company has heretofore delivered to Acquiror a complete and correct
copy of the certificate or articles of incorporation and the bylaws of the
Company and each Company Subsidiary, each as amended to the date of this
Agreement. Each such certificate or articles of incorporation and bylaws is in
full force and effect. Neither the Company nor any Company Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation or bylaws.
SECTION 3.3. Capitalization.
(a) The authorized capital stock of the Company consists of forty million
(40,000,000) shares of Company Common Stock and twenty million (20,000,000)
shares of preferred stock, par value $.001 per share, of the Company ("Company
Preferred Stock"). As of the date hereof: (i) eleven million seven hundred
fifty-seven thousand two hundred seventy (11,757,270) shares of Company Common
Stock are issued and outstanding; (ii) one million twenty-four thousand three
hundred fifty-six (1,024,356) shares of Company Common Stock have been reserved
for issuance upon the exercise of the options under the Company Stock Option
Plan; (iii) one million seventy-four thousand three hundred (1,074,300) shares
of Company Common Stock are held by the Company in the Company's treasury and
(iv) no shares of Company Preferred Stock are issued or
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outstanding. Schedule 3.3 sets forth a complete and correct list, as of the date
hereof, of the number of shares of Company Common Stock subject to the Options,
including, without limitation, those subject to employee stock options or other
rights to purchase or receive Company Common Stock granted under the Company
Stock Option Plan in each case including the dates of grant and exercise prices
thereof.
(b) All outstanding shares of capital stock of the Company are, and all
shares which may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except for the shares of Company Common Stock issuable pursuant to the Option
Agreement and shares of Company Common Stock issuable upon exercise of the
rights (the "Rights") distributed pursuant to the Rights Agreement dated as of
April 14, 1998, between the Company and American Stock Transfer & Trust Company
(the "Rights Agreement") to holders of Company Common Stock pursuant to the
Rights Agreement, (i) there are not issued, reserved for issuance or outstanding
(A) any shares of capital stock or other voting securities of the Company, (B)
any securities of the Company or any Company Subsidiary convertible into or
exchangeable or exercisable for shares of capital stock or voting securities or
ownership interests of the Company or any Company Subsidiary, (C) any warrants,
calls, options or other rights to acquire from the Company or any Company
Subsidiary, and any obligation of the Company or any Company Subsidiary to
issue, any capital stock, voting securities or other ownership interests in, or
securities convertible into or exchangeable or exercisable for capital stock or
voting securities of, or other ownership interests in, the Company or any
Company Subsidiary, (ii) there are no outstanding obligations of the Company or
any Company Subsidiary to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered or
sold, any such securities, including, without limitation, any offer, issuance or
sale in such a manner that would constitute a public offering of securities
under the Securities Act, and (iii) except as contemplated in this Agreement,
the Company is not presently under any obligation, has not agreed or committed,
and has not granted rights, to register under the Securities Act or the Exchange
Act, or otherwise file any registration statement under any such statute
covering, any of its currently outstanding capital stock or other securities or
any of its capital stock or other securities that may be subsequently issued.
(c) Except for the Option Agreement, the option agreements under the
Company Stock Option Plan and the Rights Agreement, neither the Company nor any
Company Subsidiary is a party to any agreement restricting the purchase or
transfer of, relating to the voting of or granting any preemptive or
antidilutive rights with respect to, any securities of the Company or any of the
Company Subsidiaries that are outstanding or that may be subsequently issued
upon the conversion or exercise of any instrument or otherwise.
(d) The Company represents and warrants to Acquiror and Merger Sub that on
the Closing Date, the aggregate number of outstanding shares of Company Common
Stock on a fully diluted basis (assuming full exercise of the Options) shall not
exceed twelve million seven hundred eighty-one thousand six hundred twenty-six
(12,781,626) shares.
SECTION 3.4. Authority.
The Company has the necessary corporate power and authority to enter into
this Agreement and, subject to obtaining the requisite approval of the Agreement
by the Company's stockholders required by Delaware Law ("Company Stockholder
Approval"),
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to perform its obligations hereunder and to consummate the transactions
contemplated hereby. Except for Company Stockholder Approval, the execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Acquiror and Merger Sub, constitutes a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
SECTION 3.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do not, and
the performance by the Company of its obligations under this Agreement will not,
(i) conflict with or violate the certificate or articles of incorporation or
bylaws of the Company or any Company Subsidiary, (ii) subject to obtaining the
approvals and compliance with the requirements set forth in Section 3.5(b),
conflict with or violate any law, statute, ordinance, rule, regulation, order,
judgment or decree applicable to the Company or any Company Subsidiary or by
which any of their respective properties or assets is bound or affected, or
(iii) except as set forth in Schedule 3.5, result in any breach of or constitute
a default (or an event which with or without notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of an
Encumbrance on any of the properties or assets of the Company or any Company
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Company Subsidiary is a party or by which the
Company, any Company Subsidiary or any of their respective properties or assets
is bound or affected, except, in the case of clauses (ii) and (iii) above, for
any such conflicts, violations, breaches, defaults or other alterations or
occurrences that (A) would not prevent or delay consummation of the Merger in
any material respect or otherwise prevent the Company from performing its
obligations under this Agreement in any material respect, and (B) have not had
and would not be reasonably likely to have a Material Adverse Effect on the
Company.
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign (each a "Governmental
Entity"), by or with respect to the Company or any Company Subsidiary, except
(i) for (A) applicable requirements, if any, of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Securities Act of 1933, as amended
(the "Securities Act"), state securities or "blue sky" laws ("Blue Sky Laws"),
state takeover laws, the New York Stock Exchange ("NYSE") and the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act") and
the U.S. Food and Drug Administration (the "FDA"), (B) applicable requirements,
if any, of the consents, approvals, authorizations or permits described in
Schedule 3.5, and (C) filing and recordation of appropriate merger documents as
required by Delaware Law, and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
(A) would not prevent or delay consummation of the Merger
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in any material respect or otherwise prevent the Company from performing its
obligations under this Agreement in any material respect, or (B) have not had
and would not be reasonably likely to have a Material Adverse Effect on the
Company.
(c) Except as set forth on Schedule 3.5, the execution and delivery of this
Agreement by the Company do not, the performance of this Agreement by the
Company will not, and the consummation of the transactions contemplated by this
Agreement or the Option Agreement will not, (i) entitle any current or former
employee or officer of the Company or any ERISA Affiliate to severance pay,
unemployment compensation or any other payment, (ii) accelerate the time of
payment or vesting, or increase the amount of compensation, due any such
employee or officer, or (iii) except pursuant to the Company Stock Option Plan
accelerate the vesting of any stock option or of any shares of restricted stock
or other securities of the Company.
SECTION 3.6. SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports, statements and other
documents required to be filed with the Securities and Exchange Commission (the
"SEC") since January 1, 1995, and has heretofore furnished to Acquiror, in the
form filed with the SEC since such date, together with any amendments thereto,
all of its (i) Annual Reports on Form 10-K, (ii) Quarterly Reports on Form 10-Q,
(iii) proxy statements relating to meetings of stockholders (whether annual or
special), (iv) reports on Form 8-K, and (v) other reports or registration
statements filed by the Company (collectively, the "Company SEC Reports"). As of
their respective filing dates, the Company SEC Reports (x) complied as to form
in all material respects with the requirements of the Exchange Act and the
Securities Act, as applicable, and (y) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(b) The audited consolidated financial statements and unaudited interim
financial statements of the Company included in the Company SEC Reports complied
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto. The financial
statements, including all related notes and schedules, contained in the Company
SEC Reports (or incorporated by reference therein) present fairly in all
material respects the consolidated financial position of the Company and the
Company Subsidiaries as at the respective dates thereof and the consolidated
results of operations and cash flows of the Company and the Company Subsidiaries
for the periods indicated, in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be noted therein) and subject in
the case of interim financial statements to normal year-end adjustments.
SECTION 3.7. No Undisclosed Liabilities.
Neither the Company nor any of the Company Subsidiaries has any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise,
except (a) liabilities or obligations reflected in the Company SEC Reports
through the date of the filing of the Company's Quarterly Report on Form 10-Q in
respect of the fiscal quarter ending September 30, 1999, (b) liabilities or
obligations incurred in the ordinary course of business consistent with past
practice since September 30, 1999 which have not had, and will not have, a
Material Adverse Effect on the Company and (c) liabilities or obligations
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which have not had and are not reasonably likely to have a Material Adverse
Effect on the Company.
SECTION 3.8. Absence of Certain Changes or Events.
Since September 30, 1999, the Company and the Company Subsidiaries have
conducted their businesses only in the ordinary course consistent with past
practice, and except as set forth on Schedule 3.8, there has not been (i) any
Material Adverse Effect on the Company, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock, (iii) any split,
combination or reclassification of any of the Company's capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, (iv) (w) any
granting by the Company or any Company Subsidiary to any current or former
director, officer or employee of the Company or any of the Company Subsidiaries
of any increase in compensation, bonus or other benefits, except for normal
increases in cash compensation and annual stock option awards granted on
November 12, 1999 (as set forth on Schedule 3.8) in the ordinary course of
business consistent with past practice, (x) any granting by the Company or any
of the Company Subsidiaries to any such current or former director, officer or
employee of any increase in severance or termination pay, (y) any entry by the
Company or any of the Company Subsidiaries into, or any amendment of, any
employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director, officer or
employee or (z) any amendment to, or modification of, any Option, (v) any
damage, destruction or loss, whether or not covered by insurance, that would be
reasonably likely to have a Material Adverse Effect on the Company, (vi) any
change in accounting methods, principles or practices by the Company materially
affecting its assets, liabilities or businesses, except insofar as may have been
required by a change in GAAP, or (vii) any Tax election that would be reasonably
likely to have a Material Adverse Effect on the Company or any of its tax
attributes or any settlement or compromise of any material income tax liability.
SECTION 3.9. Absence of Litigation.
Except as set forth on Schedule 3.9 and except as set forth in the
Company's annual report on Form 10-K filed with the SEC on March 16, 1999, there
are (a) no claims, actions, suits, investigations, or proceedings pending or, to
the knowledge of the Company, threatened against the Company or any Company
Subsidiary before any court, administrative, governmental, arbitral, mediation
or regulatory authority or body, domestic or foreign, that would be reasonably
likely to have a Material Adverse Effect on the Company or that challenge or
seek to prevent, enjoin, alter or materially delay the transactions contemplated
hereby or by the Option Agreement, and (b) no judgments, decrees, injunctions or
orders of any Governmental Entity or arbitrator outstanding against the Company
or any Company Subsidiary.
SECTION 3.10. Licenses and Permits; Compliance with Laws.
Set forth on Schedule 3.10 is a true and complete list of all permits,
licenses, franchises, authorizations and approvals (none of which has been
modified or rescinded and all of which are in full force and effect) from all
Governmental Entities held by the Company and the Company Subsidiaries (the
"Company Permits"). The Company
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Permits constitute all permits, licenses and approvals of all Governmental
Entities which are necessary for the operation of the businesses of the Company
and the Company Subsidiaries as presently conducted and for the Company and the
Company Subsidiaries to own, lease and operate their respective properties,
except where the failure to have any such permits, licenses or approvals would
not have a Material Adverse Effect on the Company. The Company and the Company
Subsidiaries are in compliance with the terms of the Company Permits and all
applicable statutes, laws, ordinances, rules and regulations, except where the
failure so to comply would not have a Material Adverse Effect on the Company.
SECTION 3.11. Unlawful Payments.
None of the Company, any Company Subsidiary, or any officer, director,
employee, agent or representative of the Company or any Company Subsidiary has
made, directly or indirectly, any bribe or kickback, illegal political
contribution, payment from corporate funds which was incorrectly recorded on the
books and records of the Company or any Company Subsidiary, unlawful payment
from corporate funds to governmental or municipal officials in their individual
capacities for the purpose of affecting their action or the actions of the
jurisdiction which they represent to obtain favorable treatment in securing
business or licenses or to obtain special concessions of any kind whatsoever, or
illegal payment from corporate funds to obtain or retain any business.
SECTION 3.12. Taxes.
The Company and the Company Subsidiaries have prepared and filed on a
timely basis with all appropriate Governmental Entities all material returns,
reports, information statements and other documentation in respect of Taxes that
they are required to file, including extensions, and all such returns, reports,
information statements and other documentation are correct and complete in all
material respects. The Company and the Company Subsidiaries have paid in full
all Taxes due (other than Taxes, the failure of which to pay would not have a
Material Adverse Effect on the Company) and, in the case of material Taxes
accruing but not due, the Company has made adequate provisions in its books and
records and financial statements for such payments. The Company and the Company
Subsidiaries have withheld from payments made to its present or former
employees, contractors, officers and directors, creditor or other third party,
all amounts required by law to be withheld except where the liability for which
would not have a Material Adverse Effect on the Company, and has, where
required, remitted such amounts within the applicable periods to the appropriate
Governmental Entities. In addition, (a) there are no assessments of, or claims
against, the Company or the Company Subsidiaries with respect to Taxes, the
liability for which would have a Material Adverse Effect on the Company, that
are outstanding; (b) no Governmental Entity is conducting an examination or
audit of the Company or any Company Subsidiary in respect of Taxes and neither
the Company nor any Company Subsidiary has received notice of any such
examination or audit from any Governmental Entity; and (c) neither the Company
nor any Company Subsidiary has executed or filed any agreement extending the
period of assessment or collection of any Taxes which remain in effect.
SECTION 3.13. Intellectual Property.
(a) Schedule 3.13 sets forth a list and brief description of all
Intellectual Property owned, utilized or licensed by the Company and the Company
Subsidiaries (all of the
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foregoing items collectively referred to as the "Company Intellectual
Property"). Schedule 3.13 identifies the Company Intellectual Property based on
the following categories: (i) inventions, patents and patent applications, (ii)
trademarks and trade names, (iii) copyrights, (iv) licenses and (v) other
Intellectual Property. The Company has furnished Acquiror with copies of all
license agreements to which the Company or any Company Subsidiary is a party,
either as licensor or licensee, with respect to the Company Intellectual
Property. The Company and the Company Subsidiaries have good title to or, to the
knowledge of the Company after due investigation in accordance with prudent
business practices for a company engaged in a business similar to that of the
Company ("Due Investigation"), the right to use, all the Company Intellectual
Property and all inventions, processes, designs, formulae, trade secrets and
know-how necessary for the conduct of the businesses of the Company and the
Company Subsidiaries, as presently conducted or currently proposed to be
conducted, without the payment of any royalty or similar payment except to the
extent disclosed on Schedule 3.13. To the knowledge of the Company after Due
Investigation, none of the Company or any of the Company Subsidiaries is
infringing on any Intellectual Property right of others, or has knowledge of any
infringement by others of such rights of the Company or any of the Company
Subsidiaries.
(b) All licenses set forth on Schedule 3.13 are valid and binding
obligations of the Company or one or more of the Company Subsidiaries, as the
case may be, and to the knowledge of the Company, of the other parties thereto,
and enforceable against the Company or one or more of the Company Subsidiaries,
as the case may be, and to the knowledge of the Company, the other parties
thereto in accordance with their respective terms. Except as set forth on
Schedule 3.13, the Company and the Company Subsidiaries own and possess all
right, title and interest in and to, or have the right to use pursuant to a
valid license, all the Company Intellectual Property necessary for the operation
of the business of the Company and the Company Subsidiaries as presently
conducted or currently proposed to be conducted.
(c) All personnel, including employees, agents, consultants, and
contractors, who have contributed to or participated in the conception and
development of any Company Intellectual Property have executed nondisclosure
agreements and either (i) have been or are party to a written agreement with the
Company or one or more of the Company Subsidiaries that has accorded the Company
and such Company Subsidiaries full, effective, exclusive and original ownership
of all Company Intellectual Property used or required by the Company and the
Company Subsidiaries in the Company's and the Company Subsidiaries' business, or
(ii) have executed appropriate instruments of assignment in favor of the Company
or one or more of the Company Subsidiaries as assignees that have conveyed to
the Company and such Company Subsidiaries full, effective, and exclusive
ownership of all Company Intellectual Property.
(d) The Company also has delivered to Acquiror correct and complete samples
or copies of all trademarks, service marks, trade names, copyrights, patents,
registrations and, as relate to the foregoing, applications, licenses,
agreements and permissions (as amended to date) held by the Company and the
Company Subsidiaries, and have made available to Acquiror correct and complete
copies of all other written documentation evidencing ownership and prosecution
(if applicable) of each such item. With respect to each item of Company
Intellectual Property necessary for the conduct of the business of the Company
and the Company Subsidiaries as heretofore and as currently conducted, each as
set forth on Schedule 3.13: (i) with respect to each item of Company
Intellectual Property not
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owned by the Company, to the knowledge of the Company after Due Investigation,
the identified owner of such item possesses all right, title, and interest in
and to the item; (ii) the item is not subject to any outstanding judgments,
decrees, injunctions or orders of any Governmental Entity or arbitrator; (iii)
no charge, complaint, action, suit, proceeding, hearing, investigation, claim,
or demand is pending or, to the knowledge of the Company after Due
Investigation, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and (iv) except as set forth on
Schedule 3.13, neither the Company nor any of the Company Subsidiaries has
agreed to indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(e) Except as set forth on Schedule 3.13, all of the computer software,
computer firmware, computer hardware (whether general or special purpose), and
other similar or related items of automated, computerized, and/or software
system(s) that are used or relied on by the Company or any Company Subsidiary in
the administration and conduct of their respective businesses (i) will be able
to process date data (including, but not limited to, calculating, comparing, and
sequencing) in a consistent manner from, into and between the twentieth century
(through 1999), the year 2000 and the twenty-first century, including leap year
calculations, and (ii) will not malfunction, cease to function, generate
incorrect data, or produce incorrect results when processing, providing, and/or
receiving (A) date-related data into and between the twentieth and twenty-first
centuries, and (B) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
SECTION 3.14. Material Contracts.
(a) Schedule 3.14 sets forth a complete and correct list, as of the date of
this Agreement, of all agreements of the following type to which the Company or
a Company Subsidiary is a party or may be bound (collectively, the "Company
Material Contracts"): (i) agreements filed as an exhibit to the Company SEC
Reports which remain in full force and effect and each agreement that would have
been required to be filed as an exhibit to the Company SEC Reports if such
agreement had been entered into as of the date of filing of any such Company SEC
Report; (ii) employment, severance, termination, consulting and retirement
agreements; (iii) loan agreements, indentures, letters of credit, mortgages,
notes and other debt instruments and guarantees of any of the foregoing; (iv)
agreements that require aggregate annual payments of more than Fifty Thousand
Dollars ($50,000)(unless such agreements are terminable without penalty upon
ninety (90) days (or less) notice); (v) agreements containing any provisions
with respect to a "change in control"; (vi) agreements with any employee,
director, officer or beneficial owner (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of five percent (5%) or more of Company
Common Stock; (vii) agreements or arrangements concerning a partnership or joint
venture; (viii) agreements or arrangements requiring confidentiality of the
Company except to the extent that such agreements or arrangements are not
material and have been in effect for at least five (5) years; (ix) agreements
and arrangements requiring noncompetition by the Company; (x) agreements
relating to the manufacturing, packaging, marketing, sale or distribution by the
Company or any Company Subsidiary of any products owned or licensed by the
Company or any Company Subsidiary; (xi) all leases (or subleases) with respect
to real property leased by the Company as lessee or sublessee ("Real Property
Leases"); and (xii) agreements for a remaining term of five (5) years or more
with any customer of the Company or any Company Subsidiary.
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(b) Except as set forth in Schedule 3.14, all the Company Material
Contracts are valid and in full force and effect on the date hereof except to
the extent they have previously expired in accordance with their terms, and
neither the Company nor any Company Subsidiary has (or has any knowledge that
any party thereto has) violated any provision of, or committed or failed to
perform any act which with or without notice, lapse of time or both would
constitute a default under the provisions of, any Company Material Contract,
except for defaults which would not reasonably be expected to have a Material
Adverse Effect on the Company. True and complete copies of all Company Material
Contracts have been delivered to Acquiror.
SECTION 3.15. Employee Benefit Plans.
(a) Schedule 3.15 sets forth a list of all of the pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation or bonus plans or agreements or other incentive plans or
agreements, all other employee programs, arrangements or agreements and all
other employee benefit plans or fringe benefit plans, including, without
limitation, all "employee benefit plans" as that term is defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
(collectively, "Benefit Plans"), currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by the Company or any entity required to
be aggregated with the Company which is a member of the "controlled group of
corporations" which includes the Company within the meaning of Section 414(b) or
(c) of the Code (each, a "Company Commonly Controlled Entity") for the benefit
of present and former employees or directors of the Company and of each Company
Subsidiary or their beneficiaries, or providing benefits to such persons in
respect of services provided to any such entity (collectively, the "Company
Benefit Plans"). Any Company Benefit Plan which is an "employee pension benefit
plan", as that term is defined in Section 3(2) of ERISA, is referred to herein
as a "Company ERISA Plan".
(b) Each of the Company Benefit Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified and no circumstances exist that could
reasonably be expected by the Company to result in the revocation of any such
determination. Each of the Company Benefit Plans is in compliance with the
applicable terms of ERISA and the Code and any other applicable laws, rules and
regulations, the breach or violation of which could result in a Material Adverse
Effect to the Company or any Company Commonly Controlled Entity.
(c) No Company ERISA Plan which is a defined benefit pension plan has any
"unfunded current liability", as that term is defined in Section 302(d)(8)(A) of
ERISA, and the present fair market value of the assets of any such plan equals
or exceeds the plan's "benefit liabilities", as that term is defined in Section
4001(a)(16) of ERISA, when determined under actuarial factors that would apply
if the plan terminated in accordance with all applicable legal requirements.
(d) No Company Benefit Plan is or has been a multiemployer plan within the
meaning of Section 3(37) of ERISA (a "Multiemployer Plan"). Neither the Company
nor any Company Commonly Controlled Entity has completely or partially withdrawn
from any Multiemployer Plan. No termination liability to the Pension Benefit
Guaranty Corporation or withdrawal liability to any Multiemployer Plan that is
material in the aggregate has been or is reasonably expected to be incurred with
respect to any Multiemployer Plan by the Company or any Company Commonly
Controlled Entity.
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(e) The Company has furnished to Acquiror complete copies, as of the date
hereof, of all of the Company Benefit Plans that have been reduced to writing,
together with all documents establishing or constituting any related trust,
annuity contract, insurance contract or other funding instrument, and copies of
all "employee benefit plans" as that term is defined in Section 3(3) of ERISA,
including a summary of such plans that have not been reduced to writing. The
Company has furnished to Acquiror complete copies of all existing current plan
summaries, employee booklets, personnel manuals and other material documents or
written materials concerning the Company Benefit Plans.
(f) Except as set forth in Schedule 3.15(f), no amount that could be
received by (whether in cash or property or the vesting of property), or benefit
provided to, any officer, director or employee of the Company or any of its
Affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Benefit Plan
currently in effect would be an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code). Except as set forth in Schedule
3.15(f), no such Person is entitled to receive any additional payment from the
Company, the Surviving Corporation or any other Person (a "Parachute Gross Up
Payment") in the event that the excise tax of Section 4999(a) of the Code is
imposed on such Person. Except as set forth in Schedule 3.15(f), the Board of
Directors of the Company has not granted to any officer, director or employee of
the Company or any Company Subsidiary any right to receive any Parachute Gross
Up Payment. Schedule 3.15(f) sets forth the "base amount" (as such term is
defined in Section 280G(b)(3) of the Code) for each disqualified individual
(defined as set forth above) whose Options will vest pursuant to their terms in
connection with this Agreement or the Merger.
(g) All required reports and descriptions, if any (including Form 5500
Annual Reports, Summary Annual Reports, PBGC 1's and Summary Plan Descriptions)
have been filed or distributed appropriately with respect to each Company
Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and
of Section 4980B of the Code ("COBRA"), and the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA") have been met with respect to each Company
Benefit Plan.
(h) No Company Benefit Plan is an ESOP or otherwise invests in "employer
securities" (as such term is defined in Section 409(l) of the Code).
(i) The Company has made all contributions and other payments required by
and due under the terms of each Company Benefit Plan and has taken no action
(including, without limitation, actions required by law) relating to any Company
Benefit Plan that will increase Acquiror's, the Company's or any Company
Commonly Controlled Entity's obligation under any Company Benefit Plan.
(j) No Company Benefit Plan is a "qualified foreign plan" (as such term is
defined in Section 404A of the Code), and no Company Benefit Plan is subject to
the laws of any jurisdiction other than the United States of America or one of
its political subdivisions.
(k) No Company Benefit Plan promises or provides post-retirement medical
life insurance or other benefits due now or in the future to current, former or
retired employees of the Company or any Company Common Controlled Entity other
than benefits required pursuant to COBRA.
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(l) No "pension plans", as such term is defined in Section 3(2) of ERISA,
maintained by the Company or a Company Commonly Controlled Entity, have been
frozen or terminated in the last three (3) calendar years.
SECTION 3.16. Properties; Assets.
Neither the Company nor any of the Company Subsidiaries owns (of record or
beneficially) any real property or has any interest in any real property other
than the leasehold interests granted pursuant to the Real Property Leases. The
Company or one of the Company Subsidiaries is the lessee of all leasehold
estates granted pursuant to the Real Estate Leases and is in possession of the
properties purported to be leased thereunder, and each such Real Property Lease
is valid without default thereunder by the lessee. The assets and properties of
the Company and the Company Subsidiaries, taken as a whole, are in good
operating condition and repair (ordinary wear and tear excepted), and constitute
all of the assets and properties which are required for the businesses and
operations of the Company and the Company Subsidiaries as presently conducted.
SECTION 3.17. Labor Relations.
Neither the Company nor any Company Subsidiary is a party to any collective
bargaining agreement or other contract or agreement with any labor organization
or other representative of any of the employees of the Company or any Company
Subsidiary. The Company and each Company Subsidiary is in compliance in all
material respects with all laws relating to the employment or the workplace,
including, without limitation, provisions relating to wages, hours, collective
bargaining, safety and health, work authorization, equal employment opportunity,
affirmative action plans, immigration and the withholding of income taxes,
unemployment compensation, worker's compensation, employee privacy and right to
know and social security contributions.
SECTION 3.18. Environmental Matters.
(a) Except for matters which would not have a Material Adverse Effect on
the Company, (i) the Company, each Company Subsidiary and, to the knowledge of
the Company, each Product Licensee is in compliance with all applicable
Environmental Laws (as defined below); (ii) none of the Company, any Company
Subsidiary or, to the knowledge of the Company, any Product Licensee has
received any written communication that alleges that the Company, any Company
Subsidiary or any Product Licensee is not in compliance with applicable
Environmental Laws; (iii) all permits and other governmental authorizations
currently held by the Company, each Company Subsidiary and, to the knowledge of
the Company, each Product Licensee pursuant to the Environmental Laws ("Company
Environmental Permits") are in full force and effect, the Company, each Company
Subsidiary and, to the knowledge of the Company, each Product Licensee is in
compliance with all of the terms of such Company Environmental Permits, and no
other permits or other governmental authorizations are required by the Company,
any Company Subsidiary or, to the knowledge of the Company, any Product
Licensee, for the conduct of their respective businesses; and (iv) the
management, handling, storage, transportation, treatment, and disposal by the
Company, each Company Subsidiary and, to the knowledge of the Company, each
Product Licensee of any Hazardous Materials (as defined below) is and has been
in compliance with all applicable Environmental Laws.
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(b) There is no Company Environmental Claim (as defined below) pending or,
to the knowledge of the Company, threatened against or involving the Company,
any of the Company Subsidiaries or against any Person whose liability for any
Environmental Claim the Company or any of the Company Subsidiaries has or may
have retained or assumed either contractually or by operation of law.
(c) Except for matters which would not have a Material Adverse Effect on
the Company, to the knowledge of the Company, there are no past or present
actions or activities by the Company, any Company Subsidiary or any other Person
involving the storage, treatment, release, emission, discharge, disposal or
arrangement for disposal of any Hazardous Materials, that could reasonably form
the basis of any Company Environmental Claim against the Company or any Company
Subsidiary or against any Person whose liability for any Company Environmental
Claim the Company or any Company Subsidiary may have retained or assumed either
contractually or by operation of law.
(d) As used herein, these terms shall have the following meanings:
(i) "Company Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (written or oral) by any Person or Governmental Entity alleging
potential liability arising out of, based on or resulting from the
presence, or release or threatened release into the environment of, or any
exposure to, any Hazardous Materials at any property or location owned or
leased by the Company, any Company Subsidiary or any Product Licensee or
other circumstances forming the basis of any violation or alleged violation
of any Environmental Law.
(ii) "Environmental Laws" means all applicable foreign, federal, state
and local laws (including the common law), rules, requirements and
regulations relating to pollution, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or protection of human health as it relates to the
environment including, without limitation, laws and regulations relating to
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials or relating to management of asbestos in
buildings.
(iii) "Hazardous Materials" means wastes, substances, or materials
(whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants, or contaminants under any Environmental Laws, including,
without limitation, substances defined as "hazardous substances", "toxic
substances", "radioactive materials, including sources of ionizing and
nonionizing radiation", "petroleum products or wastes" or other similar
designations in, or otherwise subject to regulation under, any
Environmental Law.
SECTION 3.19. Insurance.
Schedule 3.19 contains a list of all insurance policies of director and
officer liability, title, property, fire, casualty, liability, life, workmen's
compensation, libel and slander, and other forms of insurance in force with
respect to the Company and the Company Subsidiaries. All such insurance
policies: (a) insure against such risks, and are in such amounts, as are
appropriate and reasonable, in the judgment of the Company's Board of Directors,
considering the Company and the Company Subsidiaries' properties, businesses and
operations; (b) are in full force and effect; and (c) are valid, outstanding,
and
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enforceable. Neither the Company nor any of the Company Subsidiaries has
received or given notice of cancellation with respect to any such insurance
policies.
SECTION 3.20. Board Approval; Vote Required.
The Board of Directors of the Company has determined that the transactions
contemplated by this Agreement and the Option Agreement are advisable and in the
best interests of the Company and its stockholders and has resolved to recommend
to such stockholders that they vote in favor of this Agreement. The affirmative
vote at the Company Stockholders Meeting of the holders of a majority of all
outstanding shares of Company Common Stock to adopt this Agreement is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve and adopt this Agreement and the transactions contemplated
hereby, including the Merger.
SECTION 3.21. Opinion of Financial Advisor.
The Board of Directors of the Company has received the written opinion of
Xxxxxxxxx & Xxxxx LLC, the Company's financial advisor, that the Merger
Consideration to be received by the Company's stockholders pursuant to this
Agreement is fair from a financial point of view to the holders of shares of
Company Common Stock. A copy of such opinion has been delivered to Acquiror, and
such opinion has not been withdrawn or modified in any material respect.
SECTION 3.22. Brokers.
Except for Xxxxxxxxx & Xxxxx LLC, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement and the Option Agreement
based upon arrangements made by or on behalf of the Company. Prior to the date
of this Agreement, the Company has provided to Acquiror a complete and correct
copy of all agreements between the Company and Xxxxxxxxx & Xxxxx LLC pursuant to
which such firm will be entitled to any payment relating to the transactions
contemplated by this Agreement and the Option Agreement.
SECTION 3.23. Takeover Provisions Inapplicable.
Prior to the date of this Agreement, the Board of Directors of the Company
has taken all requisite action to cause this Agreement and the transactions
contemplated by this Agreement (including those contemplated by the Option
Agreement) to be exempt from Section 203 of the Delaware Law. No other state
takeover statute or similar statute or regulation applies to or purports to
apply to this Agreement, the Option Agreement, the Merger or the other
transactions contemplated by this Agreement or the Option Agreement.
SECTION 3.24. Pooling; Tax Matters.
Neither the Company nor any of its Affiliates has taken or agreed to take
any action or failed to take any action that would prevent the Merger from (a)
being treated for financial accounting purposes as a "pooling of interests" in
accordance with GAAP and the regulations and interpretations of the SEC, or (b)
constituting a reorganization within the meaning of Section 368(a) of the Code.
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SECTION 3.25. Registration Statement; Proxy Statement/Prospectus.
The information supplied by the Company or required to be supplied by the
Company (except to the extent revised or superseded by amendments or
supplements) for inclusion in the registration statement on Form S-4, or any
amendment or supplement thereto, pursuant to which the shares of Acquiror Common
Stock to be issued in the Merger will be registered under the Securities Act
(including any amendments or supplements, the "Registration Statement") shall
not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The information
supplied by the Company or required to be supplied by the Company (except to the
extent revised or superseded by amendments or supplements) for inclusion in the
proxy statement relating to the Company Stockholders Meeting, such proxy
statement, together with the prospectus relating to the shares of Acquiror
Common Stock to be issued in the Merger, in each case as amended or supplemented
from time to time, the "Proxy Statement/Prospectus") shall not, on the date the
Proxy Statement/Prospectus is first mailed to the Company's stockholders, at the
time of the Company Stockholders Meeting and at the Effective Time, contain any
statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not false or misleading, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies by or on behalf of the Company for the Company
Stockholders Meeting which has become false or misleading. The Proxy
Statement/Prospectus will comply in all material respects with the provisions of
the Exchange Act. Notwithstanding the foregoing, the Company makes no
representation, warranty or covenant with respect to any information supplied or
required to be supplied by Acquiror which is contained in or omitted from any of
the foregoing documents.
SECTION 3.26. Rights Agreement.
The Company has taken all actions necessary to cause the Rights Agreement
to be amended to (a) render the Rights Agreement inapplicable to this Agreement,
the Option Agreement, the Merger and the other transactions contemplated by this
Agreement and the Option Agreement, and (b) ensure that (i) none of Acquiror,
Merger Sub or any other Acquiror Subsidiary is an Acquiring Person (as defined
in the Rights Agreement) pursuant to the Rights Agreement solely by virtue of
the execution of this Agreement and the Option Agreement or the consummation of
the Merger or the other transactions contemplated by this Agreement and the
Option Agreement and (ii) a Distribution Date, a Triggering Event or a Share
Acquisition Date (as such terms are defined in the Rights Agreement) does not
occur by reason of the execution of this Agreement and the Option Agreement, the
consummation of the Merger or the consummation of the other transactions
contemplated by this Agreement and the Option Agreement.
SECTION 3.27. Regulatory Compliance.
(a) As to each product subject to the jurisdiction of the FDA under the
Federal Food, Drug and Cosmetic Act and the regulations thereunder ("FDCA") and
the Public Health Services Act ("PHSA") and the regulations thereunder, and each
product subject to the jurisdiction of the Drug Enforcement Administration
("DEA") under the Controlled
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Substances Act ("CSA") and the regulations thereunder (each such product, a
"Pharmaceutical Product") that is manufactured, packaged, labeled, tested,
distributed, sold, and/or marketed by the Company or any Company Subsidiary, or
any Pharmaceutical Product licensed by the Company to any licensee of the
Company or any Company Subsidiary (a "Product Licensee"), such Pharmaceutical
Product is being manufactured, packaged, labeled, tested, distributed, sold
and/or marketed by the Company, any Company Subsidiary, and, to the knowledge of
the Company after Due Investigation, each Product Licensee in compliance with
all applicable requirements under FDCA, PHSA, CSA, and similar laws, rules and
regulations relating to investigational use, premarket clearance, licensure, or
application approval, good manufacturing practices, good laboratory practices,
good clinical practices, labeling, advertising, record keeping, filing of
reports including but not limited to adverse event reports as required by 21
C.F.R. sec. 314.80, and security, except where the failure to be in compliance
would not have a Material Adverse Effect on the Company. None of the Company,
any Company Subsidiary or, to the knowledge of the Company after Due
Investigation, any Product Licensee has received any notice or other
communication from the FDA, DEA, or any other Governmental Entity (i) contesting
the premarket clearance, licensure, registration, or approval of, the uses of,
the distribution of, the manufacturing or packaging of, the testing of, sale of,
controlled substance scheduling of, or the labeling and promotion of any
Pharmaceutical Product described in this Section 3.27 or (ii) otherwise alleging
any violation of any laws, rules or regulations by the Company, any Company
Subsidiary or any Product Licensee which would have a Material Adverse Effect on
the Company.
(b) No Pharmaceutical Products of the Company or any Company Subsidiary or
Pharmaceutical Products which are licensed by the Company to any Product
Licensee have been recalled, withdrawn, replaced, suspended or discontinued nor
have any DEA registrations been terminated by the Company, any Company
Subsidiary or any Product Licensee in the United States or outside the United
States (whether voluntarily or otherwise) since January 1, 1995. There are no
completed or pending efforts to impose a clinical hold on any clinical
investigation, proceedings seeking the recall, withdrawal, replacement,
suspension or seizure of any such Pharmaceutical Product, or proceedings seeking
the suspension or revocation of any DEA registration including an order to show
cause against the Company, any Company Subsidiary or, to the knowledge of the
Company after Due Investigation, any Product Licensee, nor have any such efforts
or proceedings been pending at any time since January 1, 1995 which would have a
Material Adverse Effect on the Company.
(c) As to each biological drug or other drug of the Company or the Company
Subsidiaries for which a biological license application establishment license
application, product license application, new drug application, investigational
new drug application, abbreviated new drug application, registration issued by
the DEA, or similar state or foreign regulatory application has been approved,
the Company, the Company Subsidiaries and, to the knowledge of the Company after
Due Investigation, the Product Licensees are in compliance with 21 U.S.C. sec.
355, 42 U.S.C. sec. 351, and 21 U.S.C. sec. 822, and 21 C.F.R. Parts 312, 314,
601, and 1301 et seq., respectively, and similar laws and all terms and
conditions of such applications, except where the failure to be in compliance
would not have a Material Adverse Effect on the Company. As to each such
biological drug or other drug, the Company and any relevant Company Subsidiary
and, to the knowledge of the Company after Due Investigation, Product Licensee,
and the officers, employees or agents of the Company, such Company Subsidiary
and, to the knowledge of the Company after Due Investigation, the officers,
employees or agents of any Product Licensee have
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included in the application for such biological drug or other drug, where
required, the certification described in 21 U.S.C. sec. 335a(k)(1) or any
similar law and the list described in 21 U.S.C. sec. 335a(k)(2) or any similar
law, and such certification and such list was in each case true and accurate
when made and remained true and accurate thereafter, except in the case where
the failure of such application to be true and accurate would not have a
Material Adverse Effect on the Company. In addition, the Company, the Company
Subsidiaries and, to the knowledge of the Company after Due Investigation,
Product Licensees are in material compliance with all applicable registration
and listing requirements set forth in 21 U.S.C. sec. 360 and 21 C.F.R. Part 207
and all similar laws.
(d) Each article of any biological drug or other drug manufactured and/or
distributed by the Company, any of the Company Subsidiaries and, to the
knowledge of the Company after Due Investigation, any Product Licensee is not
adulterated within the meaning of 21 U.S.C. sec. 351 (or similar laws) or
misbranded within the meaning of 21 U.S.C. sec. 352 (or similar laws), and is
not a product that is in violation of 21 U.S.C. sec. 355, 42 U.S.C. sec. 351 (or
similar laws), except where such failure in compliance with the foregoing would
not have a Material Adverse Effect on the Company.
(e) Except with respect to Lyphomed and Lyphomed's officers, employees and
agents, none of the Company, any Company Subsidiary or, to the knowledge of the
Company after Due Investigation, any Product Licensee, or any officer, employee
or agent of either the Company, any Company Subsidiary or, to the knowledge of
the Company after Due Investigation, any Product Licensee has made any untrue
statement of a material fact or fraudulent statement to the FDA or other
Governmental Entity, failed to disclose a fact required to be disclosed to the
FDA or any other Governmental Entity, or committed an act, made a statement, or
failed to make a statement that, at the time such disclosure was made, could
reasonably be expected to provide a basis for the FDA or any other Governmental
Entity to invoke its policy respecting "Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities", set forth in 56 Fed. Reg. 46191
(September 10, 1991) or any similar policy. Neither the Company, any Company
Subsidiary or, to the knowledge of the Company after Due Investigation, any
Product Licensee, or any officer, employee or agent of the Company, any Company
Subsidiary or, to the knowledge of the Company after Due Investigation, any
Product Licensee, has been convicted of any crime or engaged in any conduct for
which debarment is mandated by 21 U.S.C. sec. 335a(a) or any similar law or
authorized by 21 U.S.C. sec. 335a(b) or any similar law.
(f) None of the Company, any Company Subsidiary or, to the knowledge of the
Company after Due Investigation, any Product Licensee has received any written
notice that the FDA or any other Governmental Entity has commenced, or
threatened to initiate, any action to withdraw its approval of, request the
recall of, or change the controlled substances schedules of any product of the
Company, any Company Subsidiary or Product Licensee, or commenced, or threatened
to initiate, any action to impose a clinical hold on any clinical investigation
by the Company, any Company Subsidiary or Product Licensee, or any action to
enjoin production at, or suspend or revoke the DEA registration or any facility
of, or enter into a Consent Decree of Permanent Injunction with the Company, any
Company Subsidiary or Product Licensee which would have a Material Adverse
Effect on the Company.
(g) The Company, each of the Company Subsidiaries and, to the knowledge of
the Company after due investigation, the Product Licensees are not in violation
of, in any material respect, and are in material compliance with, all applicable
laws, rules and
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regulations regarding the conduct of pre-clinical and clinical investigations,
including, but not limited to, good laboratory practices, good clinical
practices, investigational new drug requirements and requirements regarding
informed consent and Institutional Review Boards designed to ensure the
protection of the rights and welfare of human subjects, including, but not
limited to, the requirements provided in 21 C.F.R. Parts 50, 56, 58 and 312.
(h) To the extent that any biological drugs or other drug is intended for
export from the United States, each of the Company, any Company Subsidiary and,
to the knowledge of the Company after Due Investigation, each Product Licensee
is in full compliance with all of the requirements in 21 U.S.C. sec. 381(e) or
sec. 382, and the Controlled Substances Import and Export Act (21 U.S.C. sec.
951, et. seq.
(i) The Company and each of the Company Subsidiaries and, to the knowledge
of the Company after Due Investigation, Product Licensees are not in violation
of and are in material compliance with all applicable laws, rules and
regulations regarding the manufacture, analysis, distribution and investigation
of controlled substances including, but not limited to, the requirements
provided by 21 U.S.C. sec. 801, et. seq., and 21 C.F.R. sec. 1300 et. seq.
(j) The Company has provided or made available to Acquiror all documents in
its possession, the possession of the Company Subsidiaries or, to the knowledge
of the Company after Due Investigation, the possession of Product Licensees
concerning communication to or from FDA or DEA, or prepared by FDA or DEA which
bear in any material respect on compliance with FDA or DEA regulatory
requirements.
SECTION 3.28. Current Cash Reserves; Indebtedness.
As of the date of this Agreement, the aggregate amount of (i) the Company's
cash on hand, plus (ii) liquid investments of the Company with a maturity of
three years or less ((i) and (ii) "Current Cash Reserves") is at least Sixty
Four Million Dollars ($64,000,000). The Company owns all such Current Cash
Reserves free and clear of all Encumbrances, except as set forth in Schedule
3.28. As of the date of this Agreement, the Company has no Indebtedness.
SECTION 3.29. Transaction Expenses.
As of the date of this Agreement, the aggregate good faith estimate of the
Transaction Expenses to be incurred by the Company in connection with the Merger
are as set forth on Schedule 3.29.
SECTION 3.30. Disclosure.
No representation or warranty of the Company in this Agreement and no
statement in the Company's disclosure schedules contains any statement which is
false or misleading with respect to any material fact or omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not false or misleading.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
Acquiror and Merger Sub jointly and severally represent and warrant to the
Company as follows:
SECTION 4.1. Organization and Qualification.
Merger Sub is a corporation duly organized, validly existing and in good
standing under Delaware Law. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement. As of the date of
this Agreement, except for obligations or liabilities incurred in connection
with its incorporation and organization and otherwise in connection with the
transactions contemplated by this Agreement, Merger Sub has not incurred,
directly or indirectly, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any Person.
SECTION 4.2. Certificate of Incorporation and Bylaws.
Merger Sub has heretofore made available to the Company a complete and
correct copy of the certificate of incorporation and the bylaws of Merger Sub,
each as amended to date. Such certificate of incorporation and bylaws are in
full force and effect. Merger Sub is not in violation of any of the provisions
of its certificate of incorporation or bylaws.
SECTION 4.3. Authority.
Merger Sub has the necessary corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Merger Sub and the consummation by Merger Sub of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Merger Sub
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Merger Sub and, assuming the due authorization, execution and delivery of this
Agreement by the Company and Acquiror, constitutes a legal, valid and binding
obligation of Merger Sub, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
SECTION 4.4. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Merger Sub do not, and
the performance by Merger Sub of its obligations under this Agreement will not,
(i) conflict with or violate the certificate of incorporation or bylaws of
Merger Sub, (ii) subject to compliance with the requirements set forth in
Section 4.4(b) below, conflict with or violate any law, statute, ordinance,
rule, regulation, order, judgment or decree applicable to Merger Sub or by which
any of its properties or assets is bound or affected, or (iii) except as set
forth in Schedule 5.5, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in
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the creation of any Encumbrance on any of the properties or assets of Merger Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Merger Sub
is a party or by which Merger Sub or any of its properties or assets is bound or
affected, except, in the case of clauses (ii) and (iii) above, for any such
conflicts, violations, breaches, defaults or other alterations or occurrences
that would not prevent or delay consummation of the Merger in any material
respect, or otherwise prevent Merger Sub from performing its obligations under
this Agreement in any material respect.
(b) The execution and delivery of this Agreement by Merger Sub does not,
and the performance of this Agreement by Merger Sub will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for (A) applicable requirements, if any,
of the Exchange Act, Securities Act, state takeover laws, the National
Association of Securities Dealers, Inc. (the "NASD"), the HSR Act and the FDA,
(B) applicable requirements, if any, of the consents, approvals, authorizations
or permits described in Schedule 5.5, and (C) filing and recordation of
appropriate merger documents as required by Delaware Law, and (ii) where failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Merger
in any material respect.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR
Acquiror represents and warrants to the Company subject to the exceptions
set forth herein and in Acquiror's disclosure schedules (which exceptions shall
specifically identify a Section, Subsection or clause of a single Section or
Subsection hereof, as applicable, to which such exception relates, it being
understood and agreed that each such exception shall be deemed to be disclosed
both under such Section, Subsection or clause hereof and any other Section,
Subsection or clause hereof to which such disclosure reasonably relates) that:
SECTION 5.1. Organization and Qualification; Subsidiaries.
Each of Acquiror and each Subsidiary of Acquiror, (each an "Acquiror
Subsidiary" and collectively, the "Acquiror Subsidiaries") is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Acquiror and each Acquiror Subsidiary is duly
qualified to conduct its business, and is in good standing, in each jurisdiction
where the character of its properties owned, operated or leased or the nature of
its activities makes such qualification necessary, except for such failures
which would not have a Material Adverse Effect on Acquiror. Acquiror and each
Acquiror Subsidiary has the requisite power and authority and any necessary
governmental authority, franchise, license or permit to own, operate, lease and
otherwise to hold and operate its assets and properties and to carry on its
business as now being conducted, except for such failures which would not have a
Material Adverse Effect on Acquiror. The Acquiror has no Subsidiaries other than
those listed in Schedule 5.1, each of which is wholly-owned by the Acquiror, or
any direct or indirect beneficial ownership of any securities, equity or other
ownership interest in any Person other than those listed on Schedule 5.1.
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SECTION 5.2. Certificate of Incorporation and Bylaws.
Acquiror has heretofore delivered to the Company a complete and correct
copy of the articles of incorporation and the bylaws of Acquiror, each as
amended to date. Such articles of incorporation and bylaws are in full force and
effect. Acquiror is not in violation of any of the provisions of its articles of
incorporation or bylaws.
SECTION 5.3. Capitalization.
(a) The authorized capital stock of Acquiror consists of one hundred fifty
million (150,000,000) shares of Acquiror Common Stock. As of November 12, 1999:
(i) forty-eight million two hundred thirty-four thousand two hundred
thirty-three (48,234,233) shares of Acquiror Common Stock were issued and
outstanding; (ii) four million eight hundred thousand (4,800,000) shares of
Acquiror Common Stock were reserved for issuance upon the exercise of
outstanding employee stock options or other rights to purchase or receive
Acquiror Common Stock granted under Acquiror's 1997 Incentive and Nonqualified
Stock Option Plan (the "1997 Plan"); (iii) four hundred fifty thousand (450,000)
shares of Acquiror Common Stock were reserved for issuance upon the exercise of
outstanding stock options or other rights to receive Acquiror Common Stock
granted under Acquiror's 1998 Non-employee Director Stock Option Plan (the "1998
Plan", and together with the 1997 Plan, the "Acquiror Stock Option Plans"), and
(iv) no shares of Acquiror Common Stock were held by Acquiror in Acquiror's
treasury. Schedule 5.3 sets forth a complete and correct list, as of November
24, 1999, of the number of shares of Acquiror Common Stock subject to employee
stock options or other rights to purchase or receive Acquiror Common Stock
granted under the Acquiror Stock Option Plans, the dates of grant and exercise
prices thereof.
(b) All outstanding shares of capital stock of Acquiror are, and all shares
which may be issued will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. Except as set forth
in this Section 5.3 and except for changes resulting from the issuance of shares
of Acquiror Common Stock pursuant to the Acquiror Stock Option Plans or as
expressly permitted by this Agreement, (i) there are not issued, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of Acquiror, (B) any securities of Acquiror or any Acquiror
Subsidiary convertible into or exchangeable or exercisable for shares of capital
stock or voting securities of or ownership interests in Acquiror or any Acquiror
Subsidiary, (C) any warrants, calls, options or other rights to acquire from
Acquiror or any Acquiror Subsidiary, and any obligation of Acquiror or any
Acquiror Subsidiary to issue, any capital stock, voting securities or other
ownership interests in, or securities convertible into or exchangeable or
exercisable for capital stock or voting securities of or other ownership
interests in, Acquiror or any Acquiror Subsidiary, (ii) there are no outstanding
obligations of Acquiror or any Acquiror Subsidiary to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or cause to
be issued, delivered or sold, any such securities, and (iii) except as
contemplated in this Agreement, Acquiror is not presently under any obligation,
has not agreed or committed, and has not granted rights, to register under the
Securities Act or the Exchange Act, or otherwise file any registration statement
under any such statute covering, any of its currently outstanding capital stock
or other securities or any of its capital stock or other securities that may be
subsequently issued.
(c) Except as described in Schedule 5.3, as of the date hereof, neither
Acquiror nor any Acquiror Subsidiary is a party to any agreement granting any
preemptive or
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antidilutive rights with respect to any securities of Acquiror or any Acquiror
Subsidiary that are outstanding as of the date hereof, or with respect to any
securities of Acquiror or any Acquiror Subsidiary that may be subsequently
issued upon the conversion or exercise of any instrument outstanding as of the
date hereof. Other than Acquiror Subsidiaries, Acquiror does not directly or
indirectly beneficially own any securities or other beneficial ownership
interests in any other Person.
SECTION 5.4. Authority.
Acquiror has the necessary corporate power and authority to enter into this
Agreement and, subject to obtaining the requisite approval of the stockholders
of Acquiror of the issuance of Acquiror Common Stock pursuant to this Agreement
if the aggregate number of shares of Acquiror Common Stock to be issued at
Closing will exceed nineteen and nine-tenths percent (19.9%) of the number of
shares of Acquiror Common Stock issued and outstanding as of the Closing Date
(the "Requisite Acquiror Approval"), to perform its obligations hereunder and to
consummate the transactions contemplated hereby. Except to the extent Requisite
Acquiror Approval may be required, the execution and delivery of this Agreement
by Acquiror and the consummation by Acquiror of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
and no other proceedings on the part of Acquiror are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Acquiror and, assuming the due
authorization, execution and delivery by the Company and Merger Sub, constitutes
a legal, valid and binding obligation of Acquiror, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally and by the
application of general principles of equity. Acquiror, as the sole stockholder
of Merger Sub, has approved the Merger and this Agreement.
SECTION 5.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Acquiror do not, and
the performance by Acquiror of its obligations under this Agreement will not,
(i) conflict with or violate the articles of incorporation or bylaws of
Acquiror, (ii) subject to obtaining the approvals and compliance with the
requirements set forth in Section 5.5 below, conflict with or violate any law,
statute, ordinance, rule, regulation, order, judgment or decree applicable to
Acquiror or any Acquiror Subsidiary or by which any of their respective
properties or assets are bound or affected, or (iii) except as set forth in
Schedule 5.5, result in any breach of or constitute a default (or an event which
with or without notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
properties or assets of Acquiror or any Acquiror Subsidiary pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Acquiror or any Acquiror
Subsidiary is a party or by which Acquiror or any of their respective properties
or assets are bound or affected, except, in the case of clauses (ii) and (iii)
above, for any such conflicts, violations, breaches, defaults or other
alterations or occurrences that would not (A) prevent or delay consummation of
the Merger in any material respect or otherwise prevent Acquiror from performing
its obligations under this Agreement in any material respect, and (B) have a
Material Adverse Effect on Acquiror.
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(b) The execution and delivery of this Agreement by Acquiror does not, and
the performance of this Agreement by Acquiror will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity by or with respect to Acquiror, except (i) for (A)
applicable requirements, if any, of the Securities Act, Blue Sky Laws, Exchange
Act, state takeover laws, the Nasdaq, the NASD, the HSR Act and the FDA, (B)
applicable requirements, if any, of the consents, approvals, authorizations or
permits described in Schedule 5.5, and (C) filing and recordation of appropriate
merger documents as required by Delaware Law and (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not (A) prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Acquiror from performing its obligations
under this Agreement in any material respect, and (B) have a Material Adverse
Effect on Acquiror.
SECTION 5.6. SEC Filings; Financial Statements.
(a) Acquiror has filed all forms, reports, statements and other documents
required to be filed with the SEC since June 2, 1998, and has heretofore
delivered to the Company, in the form filed with the SEC since such date,
together with any amendments thereto, all of its and their (i) Annual Reports on
Form 10-K, (ii) Quarterly Reports on Form 10-Q, (iii) proxy statements relating
to meetings of stockholders (whether annual or special), (iv) reports on Form
8-K and (v) other reports or registration statements filed by Acquiror and such
Acquiror Subsidiaries (collectively, the "Acquiror SEC Reports"). As of their
respective filing dates, the Acquiror SEC Reports (i) complied as to form in all
material respects with the requirements of the Exchange Act and the Securities
Act, as applicable, and (ii) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) The audited consolidated financial statements and unaudited interim
financial statements of Acquiror included in the Acquiror SEC Reports complied
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto. The financial
statements, including all related notes and schedules, contained in the Acquiror
SEC Reports (or incorporated by reference therein) present fairly in all
material respects the consolidated financial position of Acquiror and the
Acquiror Subsidiaries as at the respective dates thereof and the consolidated
results of operations and cash flows of Acquiror and the Acquiror Subsidiaries
for the periods indicated, in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be noted therein) and subject in
the case of interim financial statements to normal year-end adjustments.
SECTION 5.7. No Undisclosed Liabilities.
Neither Acquiror nor any of the Acquiror Subsidiaries has any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise,
except (a) liabilities or obligations reflected in the Acquiror SEC Reports
through the date of the filing of Acquiror's Quarterly Report on Form 10-Q in
respect of the fiscal quarter ending September 30, 1999, (b) liabilities or
obligations incurred in the ordinary course of business consistent with past
practice since September 30, 1999 which have not had, and will not have, a
Material Adverse Effect on Acquiror and (c) liabilities or obligations which
have not and will not have, a Material Adverse Effect on Acquiror.
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SECTION 5.8. Absence of Certain Changes or Events.
Except as disclosed in the Acquiror SEC Reports, since September 30, 1999
there has not been any Material Adverse Effect on Acquiror.
SECTION 5.9. Absence of Litigation.
Except as set forth in the Acquiror SEC Reports or on Schedule 5.9, as of
the date hereof there are (a) no claims, actions, suits, investigations, or
proceedings pending or, to Acquiror's knowledge, threatened against Acquiror or
any Acquiror Subsidiary before any court, administrative, governmental,
arbitral, mediation or regulatory authority or body, domestic or foreign, that
would be reasonably likely to have a Material Adverse Effect on Acquiror or that
challenge or seek to prevent, enjoin, alter or materially delay the transactions
contemplated hereby or by the Option Agreement, and (b) no judgments, decrees,
injunctions or orders of any Governmental Entity or arbitrator outstanding
against Acquiror or any Acquiror Subsidiary that would be reasonably likely to
have a Material Adverse Effect on Acquiror.
SECTION 5.10. Licenses and Permits; Compliance with Laws.
Acquiror and the Acquiror Subsidiaries hold all permits, licenses,
franchises, authorizations and approvals from Governmental Entities (the
"Acquiror Permits") which are necessary for the operation of the businesses of
Acquiror and the Acquiror Subsidiaries as presently conducted and for Acquiror
and the Acquiror Subsidiaries to own, lease and operate their respective
properties, except where the failure to have any such permits, licenses or
approvals would not have a Material Adverse Effect on Acquiror. Acquiror and the
Acquiror Subsidiaries are in compliance with the terms of the Acquiror Permits
and all applicable statutes, laws, ordinances, rules and regulations, except
where the failure so to comply would not have a Material Adverse Effect on
Acquiror.
SECTION 5.11. Unlawful Payments.
None of the Acquiror, any Acquiror Subsidiary, or any officer, director,
employee, agent or representative of Acquiror or any Acquiror Subsidiary has
made, directly or indirectly, any bribe or kickback, illegal political
contribution, payment from corporate funds which was incorrectly recorded on the
books and records of Acquiror or any Acquiror Subsidiary, unlawful payment from
corporate funds to governmental or municipal officials in their individual
capacities for the purpose of affecting their action or the actions of the
jurisdiction which they represent to obtain favorable treatment in securing
business or licenses or to obtain special concessions of any kind whatsoever, or
illegal payment from corporate funds to obtain or retain any business.
SECTION 5.12. Taxes.
Acquiror and the Acquiror Subsidiaries have prepared and filed on a timely
basis with all appropriate Governmental Entities all material returns, reports,
information statements and other documentation (including extensions) required
to be filed by Acquiror and the Acquiror Subsidiaries) in respect of Taxes (the
"Tax Returns") and all such Tax Returns are correct and complete in all material
respects. Acquiror and the Acquiror Subsidiaries have paid in full all Taxes due
(other than Taxes, the failure of which to pay have not had and are not
reasonably likely to have a Material Adverse Effect on Acquiror) and, in the
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case of material Taxes accruing but not due, Acquiror has made adequate
provision in its books and records and financial statements for such payment.
SECTION 5.13. Intellectual Property.
(a) Acquiror's disclosure in the Acquiror SEC Reports with respect to all
of the computer software, computer firmware, computer hardware (whether general
or special purpose), and other similar or related items of automated,
computerized, and/or software system(s) that are used or relied on by Acquiror
or any Acquiror Subsidiary in the administration and conduct of their respective
businesses does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) To Acquiror's knowledge, (i) none of Acquiror or any Acquiror
Subsidiary is infringing on any Intellectual Property right of others, and (ii)
no third party is infringing on the Intellectual Property rights of Acquiror or
any Acquiror Subsidiary, except for, in the case of (i) or (ii), any
infringement which would not have a Material Adverse Effect on Acquiror.
SECTION 5.14. Environmental Matters.
(a) Except for matters which would not have a Material Adverse Effect on
Acquiror, (i) Acquiror and each Acquiror Subsidiary is in compliance with all
applicable Environmental Laws; (ii) neither Acquiror nor any Acquiror Subsidiary
has received any written communication that alleges that Acquiror or any
Acquiror Subsidiary is not in compliance with applicable Environmental Laws;
(iii) all permits and other governmental authorizations currently held by
Acquiror and each Acquiror Subsidiary pursuant to the Environmental Laws
("Acquiror Environmental Permits") are in full force and effect, and Acquiror
and each Acquiror Subsidiary is in compliance with all of the terms of such
Acquiror Environmental Permits, and no other permits or other governmental
authorizations are required by Acquiror or any Acquiror Subsidiary for the
conduct of their respective businesses; and (iv) the management, handling,
storage, transportation, treatment, and disposal by Acquiror and each Acquiror
Subsidiary of any Hazardous Materials is and has been in compliance with all
applicable Environmental Laws.
(b) Except for matters which would not have a Material Adverse Effect on
Acquiror, there is no Acquiror Environmental Claim (as defined below) pending
or, to the knowledge of Acquiror, threatened against or involving Acquiror or
any of the Acquiror Subsidiaries or against any Person whose liability for any
Acquiror Environmental Claim Acquiror or any of the Acquiror Subsidiaries has or
may have retained or assumed either contractually or by operation of law.
(c) Except for matters which would not have a Material Adverse Effect on
Acquiror, to the knowledge of Acquiror, there are no past or present actions or
activities by Acquiror or any Acquiror Subsidiary or any other Person involving
the storage, treatment, release, emission, discharge, disposal or arrangement
for disposal of any Hazardous Materials, that could reasonably form the basis of
any Acquiror Environmental Claim against Acquiror or any Acquiror Subsidiary or
against any Person whose liability for any Acquiror Environmental Claim Acquiror
or any Acquiror Subsidiary may have retained or assumed either contractually or
by operation of law.
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(x) As used herein, "Acquiror Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any Person or Governmental
Entity alleging potential liability arising out of, based on or resulting from
the presence, or release or threatened release into the environment of, or any
exposure to, any Hazardous Materials at any property or location owned or leased
by Acquiror or any Acquiror Subsidiary or other circumstances forming the basis
of any violation or alleged violation of any Environmental Law.
SECTION 5.15. Brokers.
Except for Credit Suisse First Boston, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement and the Option
Agreement based upon arrangements made by or on behalf of Acquiror.
SECTION 5.16. Pooling; Tax Matters.
Neither Acquiror nor any of its Affiliates has taken or agreed to take any
action or failed to take any action that would prevent the Merger from (a) being
treated for financial accounting purposes as a "pooling of interests" in
accordance with GAAP and the regulations and interpretations of the SEC, or (b)
from constituting a reorganization within the meaning of Section 368(a) of the
Code.
SECTION 5.17. Registration Statement; Proxy Statement/Prospectus.
The information supplied by Acquiror or required to be supplied by Acquiror
(except to the extent revised or superseded by amendments or supplements) for
inclusion in the Registration Statement, or any amendment or supplement thereto,
shall not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The information
supplied by Acquiror or required to be supplied by Acquiror (except to the
extent revised or superseded by amendments or supplements) for inclusion in the
Proxy Statement/Prospectus shall not, on the date the Proxy Statement/Prospectus
is first mailed to the Company's stockholders and at the Effective Time, contain
any statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not false or misleading, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies by or on behalf of the Company for the Company
Stockholders Meeting which has become false or misleading. The Registration
Statement will comply as to form in all material respects with the provisions of
the Securities Act. Notwithstanding the foregoing, Acquiror makes no
representation, warranty or covenant with respect to any information supplied or
required to be supplied by the Company which is contained in or omitted from any
of the foregoing documents.
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SECTION 5.18. Disclosure.
No representation or warranty of Acquiror in this Agreement and no
statement in Acquiror's disclosure schedules contains any statement which is
false or misleading with respect to any material fact or omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
ARTICLE VI.
COVENANTS
SECTION 6.1. Affirmative Covenants of the Company.
The Company hereby covenants and agrees that, prior to the Effective Time,
unless otherwise expressly contemplated by this Agreement or consented to in
writing by Acquiror, the Company shall, and shall cause each Company Subsidiary
to: (a) operate its business in the usual and ordinary course consistent with
past practices; (b) use its commercially reasonable efforts to preserve
substantially intact its business organization, maintain its rights and
franchises, retain the services of its respective officers and employees and
maintain its relationship with its respective customers, suppliers, licensors,
licensees, distributors and others having business dealings with them with the
intention that its goodwill and ongoing business shall be unimpaired at the
Effective Time; (c) use its commercially reasonable efforts to maintain and keep
its properties and assets in as good repair and condition as at present,
ordinary wear and tear excepted; (d) use its commercially reasonable efforts to
keep in full force and effect insurance comparable in amount and scope of
coverage to that currently maintained; (e) prepare and file all Tax Returns
required to be filed in a timely manner, and in a manner consistent with past
practices and applicable laws and regulations; (f) timely file with the SEC all
reports required to be filed under the Exchange Act, which reports (including
the unaudited interim financial statements included in such reports) shall
comply in all material respects with the Exchange Act, the rules and regulations
promulgated thereunder and all applicable accounting requirements; (g) operate
its business in accordance with the terms of its licenses and in all material
respects with all applicable laws, rules and regulations; (h) use reasonable
efforts consistent with prudent business practices and the past practices of the
Company to cause the cash reserves calculated pursuant to Section 8.2(f)(i) to
exceed Fifty Six Million Five Hundred Thousand Dollars ($56,500,000) immediately
following the Effective Time; (i) provide Acquiror with copies of all filings
and correspondence with any Governmental Entities with respect to Company
Intellectual Property with a reasonable period for Acquiror to review and
comment on such filings or correspondence prior to the filing or sending
thereof; and (j) if requested by Acquiror, provide Acquiror with periodic
reports regarding the status of the Company Intellectual Property.
SECTION 6.2. Negative Covenants of the Company.
Except as expressly contemplated by this Agreement or otherwise consented
to in writing by Acquiror, from the date hereof until the Closing Date, the
Company shall not, and shall cause each Company Subsidiary not to, do any of the
following:
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(a) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of its capital stock;
(b) (i) redeem, repurchase or otherwise reacquire any shares of its capital
stock or other securities or any securities or obligations convertible into or
exchangeable for any share of its capital stock or other securities, or any
options, warrants or conversion or other rights to acquire any shares of its
capital stock or other securities or any such securities or obligations (except
in connection with the exercise of outstanding Options in accordance with their
respective terms); (ii) effect any merger, consolidation, restructuring,
reorganization or recapitalization, or adopt a plan of complete or partial
liquidation or dissolution; or (iii) adjust, split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of its
capital stock or other securities;
(c) (i) issue, pledge, deliver, award, grant or sell, or register under the
Securities Act or the Exchange Act or otherwise file any registration statement
under any statute covering, or authorize or propose the issuance, pledge,
delivery, award, grant or sale of (including the grant of any Encumbrances on)
or registration of or filing of any registration statement covering any shares
of any class of its capital stock or other securities (including shares held in
treasury), any securities convertible into or exercisable or exchangeable for
any such shares or other securities, or any rights, warrants or options to
acquire any such shares or other securities (except in connection with the
exercise of outstanding Options); or (ii) amend or otherwise modify the terms of
any such rights, warrants or options;
(d) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any other
manner, (i) any business or any corporation, partnership, association or other
business organization or division (other than a wholly-owned Subsidiary of the
Company) thereof; (ii) make or commit to make any capital expenditures other
than capital expenditures not exceeding in the aggregate Fifty Thousand Dollars
($50,000.00) and which are solely for equipment, furniture and fixtures incurred
in the ordinary course of business consistent with past practices; or (iii) make
or commit to make any loans, advances or capital contributions to, or
investments in, any other Person.
(e) sell, lease, exchange, mortgage, pledge, transfer or otherwise encumber
or dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer or
otherwise encumber or dispose of, any of its assets, except for sales of
inventory in the ordinary course of business and consistent with past practices;
(f) (i) except as otherwise contemplated by this Agreement or as required
to comply with applicable law, (ii) adopt, enter into, terminate or amend in any
material respect (A) any Company Benefit Plan or (B) any other agreement, plan
or policy involving the Company or the Company Subsidiaries, and one or more of
its current or former directors, officers or employees; (iii) increase in any
manner the compensation, bonus or fringe or other benefits of, or pay any bonus
to, any current or former officer, director or employee (except for normal
increases of cash compensation or cash bonuses in the ordinary course of
business consistent with past practice that, in the aggregate, do not materially
increase benefits or compensation expenses of the Company or the Company
Subsidiaries); (iv) pay any benefit or amount not required under any Company
Benefit Plan or any other benefit plan or arrangement of the Company or the
Company Subsidiaries as in effect on the date of this Agreement; (v) increase in
any manner the severance or termination pay
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of any current or former director, officer or employee; (vi) enter into or amend
any employment, deferred compensation, consulting, severance, termination or
indemnification agreement, arrangement or understanding with any current or
former employee, officer or director; (vii) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Benefit Plan
(including the grant of stock options, "phantom" stock, stock appreciation
rights, "phantom" stock rights stock based or stock related awards, performance
units or restricted stock or the removal of existing restrictions in any Company
Benefit Plans or agreements or awards made thereunder); (viii) amend or modify
any Option, (ix) take any action to fund or in any other way secure the payment
of compensation or benefits under any employee plan, agreement, contract or
arrangement or Benefit Plan; (x) take any action to accelerate the vesting of
payment of any compensation or benefit under any Company Benefit Plan or (xi)
materially change any actuarial or other assumption used to calculate funding
obligations with respect to any pension plan or change the manner in which
contributions to any pension plan are made or the basis on which such
contributions are determined;
(g) propose or adopt any amendments to its certificate or articles of
incorporation or its bylaws;
(h) (i) make any change in any of its methods of accounting, or (ii) make
or rescind any express or deemed election relating to Taxes, settle or
compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes, or change any of its
methods of reporting income or deductions for federal income tax purposes from
those employed in the preparation of the federal income tax returns for the
taxable year ended December 31, 1998, except, in the case of clause (i) or
clause (ii), as may be required by law or GAAP;
(i) incur any Indebtedness, or prepay, before the scheduled maturity
thereof, any long-term debt;
(j) engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any of such entity's
Affiliates which involves the transfer of consideration or has a financial
impact on such entity, other than pursuant to such agreements, arrangements, or
understandings existing on the date of this Agreement;
(k) enter into any contract, agreement, commitment, arrangement, lease
(including with respect to personal property), policy or other instrument which,
had it been entered into as of the date hereof, would have been included as a
Company Material Contract;
(l) enter into any contracts, agreements, binding arrangements or
understandings relating to the distribution, sale, license, marketing or
manufacturing by third parties of the products of the Company or the Company
Subsidiaries, or products licensed by the Company or the Company Subsidiaries,
other than pursuant to any such contracts, agreements, arrangements or
understandings in place as of the date of this Agreement (that have been
disclosed in writing to Acquiror prior to the date hereof) in accordance with
their terms as of the date hereof;
(m) except for transactions in the ordinary course of business, terminate,
or amend or waive any provision of, any Company Material Contract;
(n) (i) pay, discharge, settle or satisfy any claims, liabilities,
obligations or litigation (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge, settlement or satisfaction in
the ordinary course of business consistent
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with past practice of claims for money damages which do not exceed Fifty
Thousand Dollars ($50,000) in the aggregate or in accordance with their terms or
liabilities disclosed, reflected or reserved against in the most recent
consolidated financial statements (or the notes thereto) of the Company included
in the Company SEC Reports; (ii) cancel any indebtedness; (iii) waive or assign
any claims or rights of material value or (iv) waive any benefits of, or agree
to modify in any respect (A) any standstill or similar agreements to which the
Company or any of the Company Subsidiaries is a party or (B) other than in the
ordinary course of business, any confidentiality or similar agreements to which
the Company or any of the Company Subsidiaries is a party;
(o) transfer or license to any Person or otherwise extend, amend or modify
any rights to the Company Intellectual Property;
(p) take any action that is intended or would reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions to the Merger set forth in Article
VIII not being satisfied or in a violation of any provision of this Agreement;
(q) take any action that would be reasonably likely to prevent the Merger
from being accounted for as a "pooling of interests" in accordance with GAAP;
(r) accelerate the collection of any accounts receivable; or
(s) agree in writing or otherwise to do any of the foregoing.
ARTICLE VII.
ADDITIONAL AGREEMENTS
SECTION 7.1. Access and Information.
During the period from the date hereof to the Effective Time (the "Interim
Period"), the Company and Acquiror shall, and shall cause the Company
Subsidiaries and the Acquiror Subsidiaries, respectively, to, afford to each
other and their respective officers, employees, accountants, consultants, legal
counsel and other representatives reasonable access during normal business hours
(and at such other times as the parties may mutually agree) to the properties,
executive personnel and all information concerning the business, properties,
contracts, records and personnel of the Company and the Company Subsidiaries or
Acquiror and the Acquiror Subsidiaries, as the case may be, as such other party
may reasonably request.
SECTION 7.2. Confidentiality.
Acquiror and the Company each acknowledge and agree that: (i) all
information received by it (the "Receiving Party") from or on behalf of the
other party in connection with the transactions contemplated under this
Agreement shall be deemed received pursuant to the confidentiality agreement
previously executed between the Company and Acquiror (the "Confidentiality
Agreement"), (ii) such Receiving Party shall, and shall cause its officers,
directors, employees, Affiliates, financial advisors and agents to comply with
the provisions of the Confidentiality Agreement with respect to such
information, and
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(iii) the provisions of the Confidentiality Agreements are hereby incorporated
herein by reference with the same effect as if fully set forth herein.
SECTION 7.3.Proxy Statement/Prospectus and Registration Statement; Company
Stockholders Meeting.
(a) As soon as practicable following the date of this Agreement, the
Company and Acquiror shall prepare and file with the SEC the Proxy
Statement/Prospectus, and Acquiror shall prepare and file with the SEC the
Registration Statement in which the Proxy Statement/Prospectus will be included
as a prospectus. Each of the Company and Acquiror shall use its best efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. The Company shall use its best
efforts to cause the Proxy Statement/Prospectus to be mailed to the Company's
stockholders as promptly as practicable after the Registration Statement is
declared effective under the Securities Act. Acquiror also shall take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified or filing a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of Acquiror Common Stock in the Merger, and the Company shall furnish all
information concerning the Company and the holders of Company Common Stock as
may be reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the Registration Statement or the Proxy
Statement/Prospectus will be made by either Acquiror or the Company without the
other party's prior consent (which shall not be unreasonably withheld, delayed
or conditioned) and without providing the other party the opportunity to review
and comment thereon. Acquiror shall advise the Company, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of Acquiror Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Proxy Statement/Prospectus or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information. If at any time prior to the Effective Time
any information relating to the Company or Acquiror, or any of their respective
Affiliates, officers or directors, should be discovered by the Company or
Acquiror which should be set forth in an amendment or supplement to any of the
Registration Statement or the Proxy Statement/Prospectus, so that any of such
documents would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company and Acquiror.
(b) The Company shall, as promptly as practicable after the Registration
Statement is declared effective under the Securities Act, duly call, give notice
of, convene and hold a meeting of its stockholders (the "Company Stockholders
Meeting") in accordance with Delaware Law and its certificate of incorporation
and bylaws for the purpose of obtaining the Company Stockholder Approval and
shall, through its Board of Directors, declare that this Agreement is advisable
and recommend to its stockholders the approval and adoption of this Agreement,
the Merger and the other transactions contemplated hereby; provided, however,
that the Board of Directors of the Company shall submit this Agreement to the
Company's stockholders, whether or not the Board of Directors of the Company at
any
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time subsequent to the date hereof determines that this Agreement is no longer
advisable or recommends that the stockholders of the Company reject it. Unless
the Board of Directors of the Company has withdrawn its recommendation of this
Agreement in compliance herewith, the Company shall use reasonable efforts to
solicit from stockholders of the Company proxies in favor of the approval and
adoption of this Agreement and the Merger and to secure the vote or consent of
stockholders required by Delaware Law and its certificate of incorporation and
bylaws to approve and adopt this Agreement and the Merger.
SECTION 7.4. HSR Act Matters.
Acquiror, Merger Sub and the Company (as may be required pursuant to the
HSR Act) promptly will complete all documents required to be filed with the
Federal Trade Commission and the United States Department of Justice in order to
comply with the HSR Act and, not later than fifteen (15) days after the date
hereof, together with the Persons, if any, who are required to join in such
filings, shall file such documents with the appropriate Governmental Entities.
Acquiror, Merger Sub and the Company shall promptly furnish all materials
thereafter required by any of the Governmental Entities having jurisdiction over
such filings, and shall take all reasonable actions and shall file and use their
best efforts to have declared effective or approved all documents and
notifications with any such Governmental Entity, as may be required under the
HSR Act or other federal or state antitrust laws for the consummation of the
Merger and the other transactions contemplated hereby and by the Option
Agreement. Acquiror and the Company shall each pay one-half (1/2) of all filing
fees related to compliance with the HSR Act in connection with the transactions
contemplated hereby.
SECTION 7.5. Public Announcements.
Acquiror and the Company shall consult with each other before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated hereunder and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by law or any listing agreement.
SECTION 7.6. Indemnification.
(a) The certificate of incorporation and bylaws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the certificate of incorporation and bylaws of the Company on the date
of this Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six (6) years after the Effective Time in any manner
that would adversely affect the rights thereunder of persons who at any time
prior to the Effective Time were identified as prospective indemnitees under the
certificate of incorporation or bylaws of the Company in respect of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement), unless such
modification is required by applicable law; provided, however, that,
notwithstanding the foregoing and the provisions regarding indemnification set
forth in the certificate of incorporation and bylaws of the Company as of the
date of this Agreement, the certificate of incorporation and bylaws of the
Surviving Corporation may contain provisions prohibiting indemnification in
respect of actions or omissions if the person that would be entitled to such
indemnification shall have
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been adjudged to be grossly negligent or to have committed or engaged in willful
misconduct.
(b) From and after the Effective Time, Acquiror shall cause the Surviving
Corporation to indemnify, defend and hold harmless the present and former
officers, directors and employees of the Company and the Company Subsidiaries
(collectively, the "Indemnified Parties") against all losses, expenses, claims,
damages, liabilities or amounts that are paid in settlement of, with the
approval of Acquiror or otherwise in connection with, any claim, action, suit,
proceeding or investigation (a "Claim"), based in whole or in part on the fact
that such person is or was such a director, officer or employee and arising out
of actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement), in each
case to the fullest extent permitted under Delaware Law (and shall pay expenses
in advance of the final disposition of any such action or proceeding to each
Indemnified Party to the fullest extent permitted under Delaware Law, upon
receipt from the Indemnified Party to whom expenses are advanced of the
undertaking to repay such advances contemplated by Section 145(e) of Delaware
Law), provided, however, that no Indemnified Party shall be entitled to any
indemnification or expenses pursuant to this Section 7.6 in respect of any
Claim, issue or matter as to which such Indemnified Party shall have been
adjudged to be grossly negligent or to have committed or engaged in willful
misconduct.
(c) Any Indemnified Party wishing to claim indemnification under this
Section 7.6, promptly upon learning of any such Claim, shall notify Acquiror and
the Surviving Corporation (although the failure so to notify Acquiror and the
Surviving Corporation shall not relieve Acquiror and the Surviving Corporation
from any liability which Acquiror and the Surviving Corporation may have under
this Section 7.6, except to the extent such failure prejudices Acquiror and the
Surviving Corporation), and shall deliver to Acquiror and the Surviving
Corporation the undertaking contemplated by Section 145(e) of Delaware Law.
(d) Notwithstanding any contrary provision of this Agreement, prior to the
Effective Time, the Company may purchase insurance coverage extending for a
period of six (6) years the Company's directors' and officers' liability
insurance coverage in effect as of the date hereof (covering past or future
claims with respect to periods prior to and including the Effective Time);
provided that the aggregate premium payable for such insurance shall not exceed
125% of the last annual premium paid for such coverage prior to the date hereof.
SECTION 7.7. Further Action; Commercially Reasonable Efforts.
(a) Each of the parties hereto shall use all commercially reasonable
efforts to take, or cause to be taken, all appropriate action, and do, or cause
to be done, all things necessary, proper or advisable under applicable laws or
otherwise to consummate and make effective the transactions contemplated by this
Agreement as promptly as practicable, including, without limitation, using all
its commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Entities
and parties to contracts with the Company, Acquiror or any Company Subsidiary or
Acquiror Subsidiary as are necessary for the transactions contemplated herein.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall use all commercially reasonable
efforts to take all such action.
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(b) During the Interim Period, each of the parties hereto shall promptly
notify the other in writing of any pending or, to the knowledge of such party,
threatened action, proceeding or investigation by any Governmental Entity or any
other Person (i) challenging or seeking damages in connection with the Merger or
the conversion of Company Common Stock into the Merger Consideration pursuant to
the Merger, or (ii) seeking to restrain or prohibit the consummation of the
Merger or any of the transactions contemplated by this Agreement or the Option
Agreement or otherwise limit the right of Acquiror to own or operate all or any
portion of the business or assets of the Company.
(c) Each party hereto shall use its commercially reasonable efforts to
refrain from taking any action, or entering into any transaction, which would
cause any of its representations or warranties contained in this Agreement to be
untrue or which would result in a breach of any covenant made by it in this
Agreement.
SECTION 7.8. No Solicitation.
(a) From the date of this Agreement until the Effective Time or the
termination of this Agreement pursuant to the terms of this Agreement, the
Company shall not and shall not permit any of its Subsidiaries, Affiliates,
directors, officers, employees, agents or representatives, including, without
limitation, any investment banker, attorney or accountant of the Company or any
of its Subsidiaries (collectively, "Representatives") directly or indirectly, to
(i) initiate, solicit, encourage or otherwise facilitate (including by way of
furnishing information), any inquiries or the making of any proposal or offer
that constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal (as defined below), (ii) enter into or maintain or continue discussions
or negotiate with any Person in furtherance of such inquiries or to obtain an
Acquisition Proposal, or (iii) agree to, approve, recommend, or endorse any
Acquisition Proposal, or authorize or permit any of its or their Subsidiaries or
Representatives to take any such action and, the Company shall promptly notify
Acquiror of any such inquiries and proposals received by the Company or any of
its Subsidiaries or Representatives, relating to any of such matters; provided,
however, that the foregoing shall not prohibit the Board of Directors of the
Company from (A) furnishing information to, or engaging in discussions or
negotiations with, any Person in response to an unsolicited bona fide written
Acquisition Proposal; or (B) recommending such an unsolicited bona fide written
Acquisition Proposal to the stockholders of the Company, if, and only to the
extent that, (w) the Board of Directors of the Company concludes in good faith
(after consultation with its financial advisors) that such Acquisition Proposal
would constitute a Superior Proposal (as hereinafter defined), (x) the Board of
Directors of the Company determines in good faith (after consultation with
outside legal counsel) that the failure to take such action would result in a
breach by the Board of Directors of the Company of its fiduciary duties to the
Company's stockholders under applicable law, (y) prior to furnishing such
information to, or entering into discussions or negotiations with, such Person
the Company provides prompt written notice to Acquiror to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such Person (which notice shall identify the nature and material terms of the
proposal), and (z) prior to providing any information or data to any Person in
connection with an Acquisition Proposal by any such Person, the Board of
Directors of the Company receives from such Person an executed confidentiality
agreement with provisions no less favorable to the Company than the
Confidentiality Agreement. The Company agrees that it will immediately cease and
cause to be terminated any existing activities, discussions, or negotiations
with any parties regarding any Acquisition Proposal. The
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Company shall as promptly as practicable provide Acquiror with a copy of any
written Acquisition Proposal received and a written statement with respect to
any nonwritten Acquisition Proposal received, which statement shall include the
identity of the Person making the Acquisition Proposal and the material terms
thereof. The Company shall inform Acquiror as promptly as practicable of any
change in the price, structure, form of consideration or material terms and
conditions regarding the Acquisition Proposal. The Company agrees to keep
Acquiror fully and timely informed of the status of any discussions,
negotiations, furnishing of non-public information, or other activities relating
to an Acquisition Proposal.
(b) For purposes of this Agreement, "Acquisition Proposal" means an
inquiry, offer or proposal regarding any of the following (other than the
transactions contemplated by this Agreement) involving the Company or its
Subsidiaries: (i) any merger, reorganization, consolidation, share exchange,
recapitalization, business combination, liquidation, dissolution, or other
similar transaction involving, or, any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of, all or any significant portion of the assets
or ten percent (10%) or more of the equity securities of, the Company or any of
its Subsidiaries, in a single transaction or series of related transactions
which could reasonably be expected to interfere with the completion of the
Merger; (ii) any tender offer or exchange offer for twenty percent (20%) or more
of the outstanding shares of capital stock of the Company or any Company
Subsidiary or the filing of a registration statement under the Securities Act in
connection therewith; or (iii) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
(c) For purposes of this Agreement, "Superior Proposal" means a bona fide
Acquisition Proposal made by any Person that the Board of Directors of the
Company determines in its good faith judgment to be more favorable to the
Company's stockholders than the Merger (after consideration of, among other
things, the written opinion, with only customary qualifications, of the
Company's independent financial advisor that the value of the consideration to
the Company's stockholders provided for in such proposal exceeds the value of
the consideration to the Company's stockholders provided for in the Merger) and
for which financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of the Company (based on the
advice of the Company's independent financial advisor), is reasonably capable of
being obtained by such Person.
(d) Nothing contained in this Section 7.8 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule 14e-2
promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders which, in the good faith judgment of the Board of
Directors of the Company based on the advice of outside counsel, is required
under applicable law; provided that in any such cases the Company does not
withdraw or modify, or propose to withdraw or modify, its position with respect
to the Merger or approve or recommend, or propose to approve or recommend, an
Acquisition Proposal unless the Company and its Board of Directors have complied
with all the provisions of this Section 7.8.
SECTION 7.9. Nasdaq Listing.
Acquiror shall use reasonable efforts to cause the Acquiror Common Stock to
be issued pursuant to Section 2.1(a) of this Agreement to be approved for
listing on Nasdaq, subject to official notice of issuance, prior to the
Effective Time.
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SECTION 7.10. Blue Sky.
Acquiror shall use reasonable efforts to obtain prior to the Effective Time
any necessary permits and approvals under all applicable Blue Sky Laws required
to permit the distribution of the shares of Acquiror Common Stock to be issued
in accordance with the provisions of Section 2.1(a) of this Agreement.
SECTION 7.11. Affiliates.
(a) Each of the Company and Acquiror: (i) has disclosed to the other in
Schedule 7.11 hereto all Persons who are, or may be, as of the date hereof its
"affiliates" as that term is used in SEC Accounting Series Release Nos. 130 and
135 and Rule 145 of the rules and regulations of the SEC under the Securities
Act; and (ii) shall use all reasonable efforts to cause each Person who is
identified as an "affiliate" of it in Schedule 7.11 to deliver to the other as
promptly as practicable but in no event later than thirty-one (31) days prior to
the Closing Date, a signed agreement substantially in the form attached hereto
as Exhibit A, in the case of the Company, and Exhibit B, in the case of
Acquiror. The Company and Acquiror shall notify each other from time to time of
all other Persons who then are, or may be, such an "affiliate" and use all
reasonable efforts to cause each additional Person who is identified as an
"affiliate" to execute a signed agreement as set forth in this Section 7.11(a).
(b) Shares of Company Common Stock and shares of Acquiror Common Stock held
by the "affiliates" of the Company or Acquiror set forth in Schedule 7.11, as
the case may be, shall not be transferable during the thirty (30) day period
prior to the Effective Time, and shares of Acquiror Common Stock issued to, or
as of the Effective Time held by, such "affiliates" of the Company and Acquiror
shall not be transferable until such time as financial results covering at least
thirty (30) days of combined operations of the Company and Acquiror have been
published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies, regardless of whether each such "affiliate" has
provided the signed agreement referred to in Section 7.11(a), except to the
extent permitted by, and in accordance with, SEC Accounting Series Release 135
and SEC Staff Accounting Bulletins 65 and 76. Any Company Common Stock and any
Acquiror Common Stock held by any such "affiliate" shall not be transferable,
regardless of whether such "affiliate" has provided the applicable signed
agreement referred to in Section 7.11(a), if such transfer, either alone or in
the aggregate with other transfers by "affiliates", would preclude the ability
of the parties to account for the transactions contemplated by this Agreement
and the Option Agreement as a "pooling of interests" in accordance with GAAP,
Accounting Principles Board Opinion No. 16 and all rules, regulations and
policies of the SEC. Acquiror shall not register the transfer of any shares of
Acquiror Common Stock unless such transfer is made in compliance with the
foregoing.
SECTION 7.12. Event Notices.
During the Interim Period, each party hereto will promptly notify the other
parties hereto of (a) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any condition to
the obligations of such party to effect the Merger and the other transactions
contemplated by this Agreement or the Option Agreement not to be satisfied and
(b) the failure of such party to comply with any covenant or agreement to be
complied with by it pursuant to this Agreement which would be likely to result
in any condition to the obligations of such party to effect the
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Merger and the other transactions contemplated by this Agreement or the Option
Agreement not to be satisfied. No delivery of any notice pursuant to this
Section 7.12 will cure any breach of any representation or warranty, covenant,
condition or agreement of such party contained in this Agreement or otherwise
limit or affect the remedies available hereunder to the party receiving such
notice.
SECTION 7.13. Option Agreement.
Concurrently with the execution of this Agreement, the Company shall
deliver to Acquiror an executed Option Agreement. The Company agrees to fully
perform to the fullest extent permitted under applicable law its obligations
under the Option Agreement.
SECTION 7.14. Tax Treatment.
Each of Acquiror and the Company shall use reasonable efforts to cause the
Merger to qualify as a reorganization under the provisions of Section 368 of the
Code. The parties will characterize the Merger as such a reorganization for
purposes of all Tax Returns and other filings.
SECTION 7.15. Accountant Letters; Pooling of Interests.
(a) Acquiror shall use reasonable efforts to cause to be delivered to the
Company two letters from Acquiror's independent public accountants, one dated
approximately the date on which the Registration Statement shall become
effective and one dated the Closing Date, each addressed to Acquiror and the
Company, in form reasonably satisfactory to the Company and customary in scope
for comfort letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
(b) The Company shall use reasonable efforts to cause to be delivered to
Acquiror two letters from the Company's independent public accountants, one
dated approximately the date on which the Registration Statement shall become
effective and one dated the Closing Date, each addressed to the Company and
Acquiror, in form reasonably satisfactory to Acquiror and customary in scope for
comfort letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
(c) Each of the Company and Acquiror shall use reasonable efforts to cause
the transactions contemplated by this Agreement, including the Merger, to be
accounted for as a "pooling of interests" in accordance with GAAP, Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the SEC, and each of the Company and Acquiror agrees that it shall
take no action that would cause such accounting treatment not to be obtained.
SECTION 7.16. Board of Directors of Acquiror.
Promptly following the Effective Time, the Board of Directors of Acquiror
will take all actions necessary such that Xxxxxxx X. Xxxxxxxx shall be appointed
to Acquiror's Board of Directors as a Vice Chairman of the Company with a term
expiring at the annual meeting of Acquiror's stockholders in 2001.
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SECTION 7.17. Rights Agreement.
The Board of Directors of the Company shall take all further action (in
addition to that referred to in Section 3.26) requested in writing by Acquiror
in order to render the Rights issued pursuant to the Rights Agreement to
purchase Company Common Stock inapplicable to the Merger and the other
transactions contemplated by this Agreement and the Option Agreement and, if
requested by Acquiror, to provide that the Final Expiration Date (as defined in
the Rights Agreement) shall occur immediately prior to the Effective Time.
Except as provided above with respect to the Merger and the other transactions
contemplated by this Agreement and the Option Agreement, the Board of Directors
of the Company shall not, without the prior written consent of Acquiror, (a)
amend the Rights Agreement or (b) take any action with respect to, or make any
determination under, the Rights Agreement, including a redemption of the Rights
or any action to facilitate an Acquisition Proposal.
SECTION 7.18. Exemption from Liability Under Section 16(b).
(a) Provided that the Company delivers to Acquiror the Section 16
Information with respect to the Company prior to the Effective Time, the Board
of Directors of Acquiror, or a committee of Non-Employee Directors thereof (as
such term is defined for purposes of Rule 16b-3(d) under the Exchange Act),
shall adopt a resolution in advance of the Effective Time providing that the
receipt by the Company Insiders of Acquiror Common Stock in exchange for shares
of Company Common Stock, and of options to purchase Acquiror Common Stock upon
assumption and conversion by Acquiror of options to purchase Company Common
Stock, in each case pursuant to the transactions contemplated hereby and to the
extent such securities are listed in the Section 16 Information, are intended to
be exempt from liability pursuant to Rule 16b-3 under the Exchange Act.
(b) "Section 16 Information" shall mean information accurate in all
respects regarding the Company Insiders, the number of shares of Company Common
Stock or other Company equity securities deemed to be beneficially owned by each
such Company Insider and expected to be exchanged for Acquiror Common Stock in
connection with the Merger.
(c) "Company Insiders" shall mean those officers and directors of the
Company who are subject to the reporting requirements of Section 16(a) of the
Exchange Act who are listed in the Section 16 Information.
SECTION 7.19. Requisite Acquiror Approval.
If Requisite Acquiror Approval becomes necessary and Acquiror does not
exercise Acquiror's termination right pursuant to Section 9.1(l), Acquiror shall
(without waving any right to terminate this Agreement pursuant to Section 9.1(l)
or otherwise) use commercially reasonable efforts to duly call, give notice of,
convene and hold a meeting of Acquiror's stockholders in accordance with
Tennessee Business Corporation Act, the Securities Act, the Exchange Act and
Acquiror's articles of incorporation and bylaws, for the purpose of obtaining
Requisite Acquiror Approval. In connection therewith, the Company shall use all
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper and advisable
under applicable laws or otherwise, including, without limitation, making timely
filings with the SEC and other Governmental Entities and, to the extent
necessary, amending and recirculating the Proxy Statement/Prospectus.
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ARTICLE VIII.
CLOSING CONDITIONS
SECTION 8.1. Conditions to Obligations of Acquiror, Merger Sub and the Company
to Effect the Merger.
The respective obligations of Acquiror, Merger Sub and the Company to
effect the Merger and the other transactions contemplated herein shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Stockholder Approval. The Company Stockholder Approval shall have been
obtained.
(b) Effectiveness of Registration Statement. The Registration Statement
shall have been declared effective by the SEC under the Securities Act prior to
the mailing of the Proxy Statement/Prospectus by each of the Company and
Acquiror to their respective stockholders and no stop order suspending the
effectiveness of such registration statement shall have been issued by the SEC
and no proceedings for that purpose shall have been initiated or, to the
knowledge of Acquiror or the Company, threatened by the SEC.
(c) No Order. No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, statute, rule, ordinance, regulation, executive order, decree,
judgment, stipulation, injunction or other order (whether temporary, preliminary
or permanent) in any case which is in effect and which prevents or prohibits
consummation of the Merger or any other transactions contemplated in this
Agreement; provided, however, that the parties shall use their reasonable
efforts to cause any such decree, judgment, injunction or order to be vacated or
lifted.
(d) Nasdaq Listing. Acquiror Common Stock issuable to the holders of
Company Common Stock pursuant to Section 2.1(a) of this Agreement shall have
been included for listing on Nasdaq upon official notice of issuance.
(e) HSR Act. Any waiting period with any extensions thereof under the HSR
Act shall have expired or been terminated.
(f) Company Pooling Letter. There shall have been delivered to Acquiror
and the Company a letter from the Company's independent accountants, dated as of
the Closing Date and addressed to Acquiror, the Company and Acquiror's
independent accountants, reasonably satisfactory in form and substance to
Acquiror and Acquiror's independent accountants, to the effect that (i) after
reasonable investigation, the Company's independent accountants are not aware of
any fact concerning the Company or any of the Company's stockholders or
"affiliates" (as defined in Section 7.11) that could preclude Acquiror from
accounting for the Merger as a "pooling of interests" in accordance with GAAP,
Accounting Principles Board Opinion No. 16 and all published rules, regulations
and policies of the SEC, and (ii) the Merger is eligible to be accounted for as
a "pooling of interests" in accordance with GAAP, Accounting Principles Board
Opinion No. 16 and all published rules, regulations and policies of the SEC.
(g) Acquiror Pooling Letter. There shall have been delivered to Acquiror
and the Company a letter from Acquiror's independent accountants, dated as of
the Closing Date
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and addressed to Acquiror, reasonably satisfactory in form and substance to
Acquiror, to the effect that (i) after reasonable investigation, Acquiror's
independent accountants are not aware of any fact concerning Acquiror or any of
Acquiror's stockholders or "affiliates" (as defined in Section 7.11) that could
preclude Acquiror from accounting for the Merger as a "pooling of interests" in
accordance with GAAP, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC, and (ii) Acquiror's
independent accountants concur in Acquiror's management conclusion that Acquiror
may account for the Merger as a "pooling of interests" in accordance with GAAP,
Accounting Principles Board Opinion No. 16 and all published rules, regulations
and policies of the SEC.
(h) Tax Opinion. The Company and Acquiror shall have received a legal
opinion of the Company's counsel, on or before the date the Registration
Statement shall become effective and subsequently on the Closing Date, to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368 of the Code (it being understood that, (A) in rendering such
opinion, the Company's legal counsel may rely upon tax representation letters
from each of Acquiror, Merger Sub and the Company, in each case, in form and
substance reasonably satisfactory to such tax counsel, and (B) if the Company's
legal counsel does not render such opinion, the condition set forth in this
Section shall nonetheless be deemed to be satisfied if Acquiror's legal counsel
renders such an opinion to Acquiror).
(i) Requisite Acquiror Approval. If Requisite Acquiror Approval becomes
necessary, the Requisite Acquiror Approval shall have been obtained prior to the
Extended Termination Date.
SECTION 8.2. Additional Conditions to Obligations of Acquiror and Merger Sub.
The obligations of Acquiror and Merger Sub to effect the Merger and the
other transactions contemplated in this Agreement are also subject to the
following conditions, any or all of which may be waived by Acquiror, in whole or
in part, to the extent permitted by applicable law:
(a) Representations and Warranties. The representations and warranties of
the Company made in this Agreement shall be true and correct in all material
respects when made and on and as of the Closing Date (except for representations
and warranties that speak as of a specific date or time, which need only be true
and correct in all material respects as of such date or time); provided,
however, that, notwithstanding the foregoing, the representations and warranties
of the Company set forth in Section 3.3 shall be true and correct in all
respects. Acquiror shall have received a certificate of the Chief Executive
Officer or Chief Financial Officer of the Company to that effect.
(b) Agreements and Covenants. The agreements and covenants of the Company
required to be performed on or before the Effective Time shall have been
performed in all material respects. Acquiror shall have received a certificate
of the Chief Executive Officer or Chief Financial Officer of the Company to that
effect.
(c) No Material Adverse Changes. There shall have been no Material Adverse
Effect on the Company since the date of this Agreement.
(d) No Litigation. There shall not be pending or threatened any suit,
action, proceeding or investigation: (i) challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this
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Agreement; (ii) relating to the Merger and seeking to obtain from Acquiror or
any Acquiror Subsidiary any damages that may be material to Acquiror, (iii)
seeking to prohibit or limit in any material respect Acquiror's ability to vote,
receive dividends with respect to or otherwise exercise ownership rights with
respect to the stock of the Surviving Corporation; or (iv) which would
materially and adversely affect the right of the Surviving Corporation to own
the assets or operate the business of the Company.
(e) Consents Under Company Agreements. The Company shall have obtained the
consent or approval of any Person whose consent or approval shall be required
under any agreement or instrument in order to permit the consummation of the
transactions contemplated hereby, except those which the failure to obtain would
not have a Material Adverse Effect on the Company.
(f) Minimum Closing Cash Reserves; Indebtedness. Immediately following the
Effective Time, the Company (i) shall have, after payment of all Transaction
Expenses, at least Fifty Million Dollars ($50,000,000) in the aggregate of (A)
cash on hand, plus (B) liquid investments with a maturity of three months or
less, plus (C) with respect to any marketable securities liquidated by the
Company in order to satisfy the condition set forth in clause (i)(B), the amount
by which the Company's book value of such securities immediately prior to such
liquidation exceeds the cash proceeds realized by the Company from such
liquidation; provided, that the amount added pursuant to this clause (i)(C)
shall not exceed Two Hundred Thousand Dollars ($200,000) in the aggregate, plus
(D) the outstanding royalty payments due to the Company from Fujisawa
Healthcare, Inc. ("Fujisawa") for the fiscal quarter ending December 31, 1999,
to the extent not collected; provided, that if the Closing occurs after March
31, 2000, the amount added pursuant to this clause (i)(D) shall include the
outstanding royalty payments due to the Company from Fujisawa for the fiscal
quarter ending March 31, 2000, to the extent not collected, plus (E) the
outstanding royalty payments due from Sanofi Pharma (France) ("Sanofi") to the
Company for the fiscal quarter ending December 31, 1999, to the extent not
collected; provided, that if the Closing occurs after March 3l, 2000, the amount
added pursuant to this clause (i)(E) shall include the outstanding royalty
payments due to the Company from Sanofi for the fiscal quarter ending March 31,
2000, to the extent not collected, plus (F) any amounts paid by the Company
after the date hereof and prior to the Closing which have been specifically
acknowledged in writing by Acquiror as permitted to be included for the purposes
of this Section 8.2(f) as "cash on hand" of the Company as of Closing, and (ii)
shall have no Indebtedness. Acquiror shall have received a certificate of the
Chief Financial Officer of the Company to that effect and all information
reasonably necessary for the Acquiror to determine the Company's satisfaction of
the conditions set forth in this Section 8.1(f), including any releases or
waivers Acquiror deems reasonably necessary from any Persons owed Transactions
Expenses from the Company.
(g) Release of Oral Contracts. The Company shall have obtained executed
releases in form and substance reasonably satisfactory to Acquiror of all oral
agreements set forth on Schedule 3.14.
SECTION 8.3. Additional Conditions to Obligations of the Company.
The obligations of the Company to effect the Merger and the other
transactions contemplated in this Agreement (except the transactions
contemplated in the Option
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Agreement) are also subject to the following conditions any or all of which may
be waived by the Company, in whole or in part, to the extent permitted by
applicable law:
(a) Representations and Warranties. The representations and warranties of
Acquiror and Merger Sub made in this Agreement shall be true and correct in all
material respects when made and on and as of the Closing Date (except for
representations and warranties that speak as of a specific date or time, which
need only be true and correct in all material respects as of such date and time.
The Company shall have received a certificate of the Chief Executive Officer or
Chief Financial Officer of Acquiror to such effect.
(b) Agreements and Covenants. The agreements and covenants of Acquiror and
Merger Sub required to be performed on or before the Effective Time shall have
been performed in all material respects. The Company shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of
Acquiror to such effect.
(c) No Material Adverse Change. There shall have been no Material Adverse
Effect on Acquiror since the date of this Agreement.
SECTION 8.4. Delayed Closing by the Company.
If the Closing hereunder shall not have occurred on or prior to February
29, 2000, and all of the conditions to Closing hereunder shall have otherwise
been satisfied during the month of March 2000 (except for the requirement of the
Company to satisfy the condition set forth in Section 8.2(f)(i) (the
"Cash-on-Hand Condition")), then the Company, upon prior written notice
delivered to Acquiror at least five (5) business days before the date which
would otherwise be the Closing Date hereunder, shall have a one time right to
delay the Closing Date for a period of up to thirty-five (35) days until the
date on which the Cash-on-Hand Condition shall be satisfied (such notice from
the Company shall designate the date to which the Company delays the Closing).
Nothing in this Section 8.4 shall constitute or be deemed to constitute a waiver
of any rights or conditions set forth in this Agreement and the parties
acknowledge and agree that if the Closing is delayed as contemplated in this
Section 8.4, all of the Closing conditions set forth in this Article VIII must
be satisfied or waived as of such delayed Closing Date.
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. Termination.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of this Agreement and the Merger by the
stockholders of the Company:
(a) by mutual consent of Acquiror and the Company;
(b) by Acquiror, upon a breach of any covenant or agreement on the part of
the Company set forth in this Agreement, or if any representation or warranty of
the Company shall have become untrue, in either case such that the conditions
set forth in Section 8.2(a) or Section 8.2(b) would not be satisfied (a
"Terminating Company Breach"); provided, that, if such Terminating Company
Breach is curable by the Company through the exercise of reasonable efforts and
for so long as the Company continues to
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exercise such reasonable efforts, Acquiror may not terminate this Agreement
under this Section 9.1(b);
(c) by the Company, upon breach of any covenant or agreement on the part of
Acquiror set forth in this Agreement, or if any representation or warranty of
Acquiror shall have become untrue, in either case such that the conditions set
forth in Section 8.3(a) or Section 8.3(b) would not be satisfied (a "Terminating
Acquiror Breach"); provided, that, if such Terminating Acquiror Breach is
curable by Acquiror through the exercise of their reasonable efforts and for so
long as Acquiror continues to exercise such reasonable efforts, the Company may
not terminate this Agreement under this Section 9.1(c);
(d) by either Acquiror or the Company, if there shall be any decree,
permanent injunction, judgment, order or other action by any court of competent
jurisdiction or any Governmental Entity which is final and nonappealable
preventing the consummation of the Merger; provided, that the party seeking to
terminate this Agreement pursuant to this Section 9.1(d) shall have used
reasonable efforts to cause any such decree, permanent injunction, judgment or
other order to be vacated or lifted;
(e) by either Acquiror or the Company, if the Merger shall not have been
consummated on or before that date which is two hundred forty (240) calendar
days after the date hereof; provided, however, that if a request for additional
information is received from the United States Federal Trade Commission or the
Antitrust Division of the United States Department of Justice pursuant to the
HSR Act, then such date shall be extended to the 30th day following
certification by Acquiror and/or the Company, as applicable, that Acquiror
and/or the Company, as applicable, have substantially complied with such
request, but in any event not later than that date which is three hundred (300)
calendar days after the date hereof; provided, further, that if Requisite
Acquiror Approval becomes necessary, then such date shall be extended to the
earlier of (i) one hundred twenty days after the date of the Company
Stockholders Meeting or (ii) the 120th day following written notice to the
Company from Acquiror that such Requisite Acquiror Approval is required and
delivery by Acquiror to the Company of a voting agreement, in substantially the
same form as the Voting Agreement, executed by the "affiliates" (as defined in
Section 7.11) of Acquiror, pursuant to which such affiliates agree to vote in
favor of the issuance of shares of Acquiror Common Stock in connection with the
Merger (such extended date for the Requisite Acquiror Approval, the "Extended
Termination Date"); provided, further, that the right to terminate this
Agreement under this Section 9.1(e) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of the
failure of the Merger to occur on or before such date;
(f) by either Acquiror or the Company, if the requisite vote of the
stockholders of the Company in favor of this Agreement shall not have been
obtained at the Company Stockholders Meeting (including any adjournment or
postponement thereof); provided, that the right to terminate this Agreement
under this Section 9.1(f) shall not be available to the Company if the Company
has not complied with its obligations under Section 7.3(b);
(g) by Acquiror, if (i) the Board of Directors of the Company withdraws or
modifies its recommendation of this Agreement or the Merger or shall have
resolved or publicly announced or disclosed to any third party its intention to
do any of the foregoing or the Board of Directors of the Company shall have
recommended to the stockholders of the Company any Acquisition Proposal or
resolved to do so; (ii) the Board of Directors of the
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Company fails to reconfirm its recommendation of this Agreement or the Merger
within five (5) Business Days of a written request by Acquiror to do so; (iii) a
tender offer or exchange offer for twenty percent (20%) or more of the
outstanding shares of Company Common Stock is commenced or a registration
statement with respect thereto shall have been filed and the Board of Directors
of the Company, within ten (10) Business Days after such tender offer or
exchange offer is so commenced or such registration statement is so filed,
either fails to recommend against acceptance of such tender or exchange offer by
its stockholders or takes no position with respect to the acceptance of such
tender or exchange offer by its stockholders, or (iv) the Company breaches in
any material respect the Option Agreement;
(h) by the Company, if the Board of Directors of the Company shall have
determined to recommend an Acquisition Proposal to its stockholders after
determining, pursuant to Section 7.8, that such Acquisition Proposal constitutes
a Superior Proposal, and the Company gives Acquiror at least three (3) Business
Days prior notice of its intention to effect such termination pursuant to this
Section 9.1(h), and the Company makes the payment required pursuant to Section
9.5(b) of this Agreement and pays the expenses for which the Company is
responsible under Section 9.5(a) of this Agreement;
(i) by Acquiror, if any Person (other than Acquiror or any Affiliate of
Acquiror pursuant to the Option Agreement) shall have acquired beneficial
ownership or the right to acquire beneficial ownership of, or any "group" (as
such term is defined under Section 13(d) of the Exchange Act and the regulations
promulgated thereunder), other than a "group" comprised of some or all of the
Persons listed on the signature pages to the Voting Agreement, shall have been
formed which beneficially owns, or has the right to acquire beneficial ownership
of, twenty percent (20%) or more of the then outstanding shares of capital stock
of the Company;
(j) by Acquiror, if there shall have occurred one or more events which
shall have caused a Material Adverse Effect on the Company which Material
Adverse Effect shall have remained uncured (to the extent curable) for a period
of thirty (30) days after written notice from Acquiror of Acquiror's intention
to terminate pursuant to this Section 9.1(j);
(k) by the Company, if there shall have occurred one or more events which
shall have caused a Material Adverse Effect on Acquiror which Material Adverse
Effect shall have remained uncured (to the extent curable) for a period of
thirty (30) days after written notice from the Company of the Company's
intention to terminate pursuant to this Section 9.1(k);
(l) by Acquiror, if during a Twenty Day Period (as defined below), the
Twenty Day Average Price (as defined below) shall be less than $30.00. For
purposes of this Section 9.1(l), (i) "Twenty Day Average Price" shall mean the
average of the reported closing prices per share of Acquiror Common Stock on the
Nasdaq (or the last bid price in the absence of a trade) during twenty (20)
consecutive trading days, and (ii) "Twenty Day Period" means any period of
twenty (20) consecutive trading days for the Acquiror Common Stock; or
(m) by Acquiror or the Company, if Requisite Acquiror Approval becomes
necessary but is not obtained at a duly called meeting of the stockholders of
Acquiror for such purpose (including any adjournment or postponement thereof).
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The right of any party hereto to terminate this Agreement pursuant to this
Section 9.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any Affiliate of
such party or any of their respective officers, directors, representatives or
agents, whether prior to or after the execution of this Agreement.
SECTION 9.2. Effect of Termination.
Except as provided in Section 9.5 of this Agreement, in the event of the
termination of this Agreement pursuant to Section 9.1, this Agreement shall
forthwith become void, there shall be no liability on the part of Acquiror or
the Company or any of their respective officers, directors, stockholders or
Affiliates to the other, and all rights and obligations of any party hereto
shall cease, except that nothing herein shall relieve any party from liability
for any willful breach by a party of any of its representations, warranties,
covenants or agreements in this Agreement; and provided that the provisions of
Section 7.2 and Section 9.5 of this Agreement and the Option Agreement will
remain in full force and effect and survive any termination of this Agreement.
SECTION 9.3. Amendment.
This Agreement may be amended by the parties hereto by action taken or
authorized by their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after approval of the Merger by the
stockholders of the Company or the stockholders of Acquiror if Requisite
Acquiror Approval becomes necessary, no amendment may be made which by law or
rule of Nasdaq requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed by each of the parties hereto.
SECTION 9.4. Extension; Waiver.
At any time prior to the Effective Time, any party hereto may (a) extend
the time for the performance of any of the obligations or other acts of any
other party hereto, (b) waive any inaccuracies in the representations and
warranties of any other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance by any other party with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bond thereby.
SECTION 9.5 Fees, Expenses and Other Payments.
(a) Except as otherwise set forth in this Agreement, all costs and expenses
incurred by the parties hereto shall be borne solely and entirely by the party
which has incurred such costs and expenses, whether or not the Merger is
consummated; provided, however, that Acquiror and the Company shall share
equally all costs and expenses (other than attorney's and accountants' fees and
expenses) incurred in relation to printing and filing and, as applicable,
mailing the Registration Statement and the Proxy Statement/
Prospectus and any amendments or supplements thereto and all SEC and other
regulatory filing fees incurred in connection with the Registration Statement
and the Proxy Statement/Prospectus and the fees required under the HSR Act and
applicable foreign laws, if any, incurred in connection with the transactions
contemplated under this Agreement.
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(b) If this Agreement is terminated (i) by Acquiror pursuant to Section
9.1(b), (ii) by Acquiror pursuant to Section 9.1(g), or (iii) by the Company
pursuant to Section 9.1(h), then the Company shall pay to Acquiror a termination
fee of Twelve Million Dollars ($12,000,000) in cash (the "Termination Fee"),
immediately upon such termination.
(c) If this Agreement is terminated by Acquiror pursuant to Section 9.1(l),
then the Company shall pay to Acquiror a fee equal to two (2) times the Acquiror
Transaction Expenses in addition to any amounts which may become payable
pursuant to Section 9.5(e); provided, however, that in no event shall the fee
payable pursuant to this Section 9.5(c) exceed Six Million Dollars ($6,000,000).
For purposes of this Section 9.5(c), "Acquiror Transaction Expenses" shall mean
all documented costs, fees, expenses and other amounts incurred or payable,
directly or indirectly, by Acquiror or any Affiliate of Acquiror in connection
with the Merger and this Agreement, including, without limitation, (i) all
reasonable legal, accounting, brokerage and other fees, costs and expenses
incurred for the benefit of Acquiror or any Affiliate of Acquiror and (ii) all
filing, registration and other similar fees and expenses payable paid by or on
behalf of Acquiror or any Affiliate of Acquiror.
(d) If this Agreement is terminated pursuant to Section 9.1(e) as a result
of the failure of the Company to timely fulfill any obligation under this
Agreement, and if an Acquisition Proposal involving the Company is thereafter
consummated or the Company enters into a definitive agreement with respect to an
Acquisition Proposal within twelve (12) months after such termination of this
Agreement, the Company shall pay to Acquiror the Termination Fee, at or prior to
the consummation of such Acquisition Proposal, or immediately upon the effective
date of such definitive agreement, whichever is earlier.
(e) If this Agreement is terminated (i) by either Acquiror or the Company
pursuant to Section 9.1(f) as a result of the failure to receive the requisite
vote for approval of this Agreement and the Merger by the stockholders of the
Company at the Company Stockholders Meeting or (ii) by Acquiror pursuant to
Section 9.1(l), and, in the case of clause (i) or (ii), an Acquisition Proposal
involving the Company is thereafter consummated or the Company enters into a
definitive agreement with respect to an Acquisition Proposal within twelve (12)
months after such termination of this Agreement pursuant to Section 9.1(f) or
Section 9.1(l), as applicable, then the Company shall pay to Acquiror the
Termination Fee at or prior to the consummation of such Acquisition Proposal or
immediately upon the effective date of such agreement, whichever is earlier.
(f) Any payment required to be made pursuant to Section 9.5(b), Section
9.5(c), Section 9.5(d) or Section 9.5(e) of this Agreement shall be made by wire
transfer of immediately available funds to an account designated by Acquiror.
ARTICLE X.
GENERAL PROVISIONS
SECTION 10.1. Effectiveness of Representations, Warranties and Agreements.
(a) Except as set forth in Section 10.1(b) of this Agreement, the
representations, warranties, covenants and agreements of each party hereto shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any other party
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hereto, any Affiliate of such party or any of their officers, directors,
representatives or agents whether prior to or after the execution of this
Agreement.
(b) The representations and warranties in this Agreement will terminate at
the Effective Time; provided, however, that this Section 10.1(b) shall in no way
limit or terminate any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time or after the termination of
this Agreement pursuant to Article IX.
SECTION 10.2. Notices.
All notices and other communications given or made pursuant hereto shall be
in writing and shall be deemed to have been duly given or made as of the date
delivered, mailed or transmitted, and shall be effective upon receipt, if
delivered personally, mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like changes of address) or
sent by electronic transmission to the telecopier number specified below:
(a) If to Acquiror:
KING PHARMACEUTICALS, INC.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Chief Executive Officer
and
Telecopier No.: (000) 000-0000
Attention: Executive Vice President and General Counsel
With a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Xx., Esq.
Xxxxxx X. Xxxxx, Esq.
(b) If to the Company:
MEDCO RESEARCH, INC.
0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxx, Xxxxx Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Chairman
With a copy (which shall not constitute notice) to:
Xxxxxxxxx, Gartlier & Gross
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
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SECTION 10.3. Certain Definitions.
For purposes of this Agreement, the term:
(a) "Affiliate" of any Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person;
(b) "beneficial owner" (including the terms "beneficial ownership" and
"beneficially own") means with respect to any shares of capital stock, a Person
who shall be deemed to be the beneficial owner or have beneficial ownership of
such shares (i) which such Person or any of its Affiliates or associates
beneficially owns, directly or indirectly, (ii) which such Person or any of its
Affiliates or associates (as such term is defined in Rule 12b-2 of the Exchange
Act) has, directly or indirectly, (A) the right to acquire (whether such right
is exercisable immediately or subject only to the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding, (iii) which are
beneficially owned, directly or indirectly, by any other Persons with whom such
Person or any of its Affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding voting or disposing of any
such shares or (iv) pursuant to Section 13(d) of the Exchange Act and any rules
or regulations promulgated thereunder;
(c) "Business Day" shall mean any day other than a day on which banks in
the State of New York are authorized or obligated to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "Encumbrance" shall mean any lien, pledge, charge, security interest or
other encumbrance of any nature;
(f) "Indebtedness" of a Person shall mean (i) indebtedness of such Person
for borrowed money whether short-term or long-term and whether secured or
unsecured, (ii) indebtedness of such Person for the deferred purchase price of
services or property, which purchase price (A) is due twelve months or more from
the date of incurrence of the obligation in respect thereof or (B) customarily
or actually is evidenced by a note or other written instrument (including,
without limitation, any such indebtedness which is non-recourse to the credit of
such Person but is secured by assets of such Person); provided,that for purposes
of this clause (ii), "Indebtedness" shall not include (x) amounts that may
become due to a clinical research organization in connection with the ordinary
course annual "true-up" process pursuant to which the Company's actual payments
for services rendered by such clinical research organization to the Company are
reconciled against the actual services rendered or (y) milestone payments or
license fees payable by the Company pursuant to the terms of the license
agreements set forth on Schedule 3.13; (iii) obligations of such Person under
capital leases, (iv) obligations of such Person arising under acceptance
facilities, (v) the undrawn face amount of, and unpaid reimbursement obligations
in respect of, all letters of credit issued for the account of such Person, (vi)
all obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (vii) all obligations of such Person upon which interest
charges are
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customarily paid, (viii) all obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (ix) obligations of such Person to purchase, redeem, retire, defease
or otherwise acquire for value any capital stock of such Person or any warrants,
rights or options to acquire such capital stock (with redeemable preferred stock
being valued at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends), (x) all executory obligations of
such Person in respect of financial hedge contracts (including, without
limitation, equity hedge contracts), (xi) all indebtedness of the types referred
to in clauses (i) through (x) above for which such Person is obligated under a
contingent obligation and (xii) renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any such indebtedness,
obligation or guarantee;
(g) "Intellectual Property" means all (i) patents and patent applications,
(ii) trademarks, service marks, trade dress, logos, trade names, and corporate
names and registrations and applications for registration thereof, (iii)
copyrights and registrations and applications for registration thereof, (iv)
computer software, data, and documentation, (v) trade secrets and confidential
business information (including formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial, marketing, and business data, pricing and
cost information, business and marketing plans, and customer and supplier lists
and information, (vi) Internet domain names and applications for domain names,
(vii) other proprietary rights, and (viii) copies and tangible embodiments
thereof (in whatever form or medium);
(h) "Material Adverse Effect" shall mean, with respect to a specified
Person any change, event or effect that individually or in the aggregate (taking
into account all other such changes, events or effects) has had, or would be
reasonably likely to have, a material adverse effect on the business,
operations, earnings, condition (financial or otherwise) or prospects of such
Person and its Subsidiaries, if any, taken as a whole, except to the extent in
the case of Acquiror that any such change, event or effect is caused by a
decline in the price of a share of Acquiror Common Stock or a change in the
trading volume of Acquiror Common Stock;
(i) "Person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d) of the Exchange Act);
(j) "reasonable efforts" shall mean, as to a party hereto, an undertaking
by such party to perform or satisfy an obligation or duty or otherwise act in a
manner reasonably calculated to obtain the intended result by action or
expenditure not disproportionate or unduly burdensome in the circumstances,
which means, among other things, that such party shall not be required to (i)
expend funds other than for payment of the reasonable and customary costs and
expenses of employees, counsel, consultants, representatives or agents of such
party in connection with the performance or satisfaction of such obligation or
duty or other action or (ii) institute litigation or arbitration as a part of
its reasonable efforts; and
(k) "Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") shall include, except where the context otherwise requires, all
federal, state, local and
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foreign income, profits, franchise, gross receipts, payroll, sales, employment,
use, property, withholding, excise, occupancy and other taxes, duties or
assessments or claims of any nature whatsoever, together with all interest,
penalties and additions imposed with respect to such amounts.
(l) "Transaction Expenses" shall mean all costs, fees, expenses and other
amounts incurred or payable (or reasonably expected to be incurred or payable),
directly or indirectly, by the Company or any Affiliate of the Company, in
connection with the Merger, including, without limitation, (i) all reasonable
legal, accounting, brokerage and other fees, costs and expenses incurred for the
benefit of the Company or any Affiliate of the Company, including, without
limitation, the fees payable to Xxxxxxxxx & Xxxxx LLC, (ii) all filing,
registration and other similar fees and expenses paid by or on behalf of the
Company or any Affiliate of the Company, (iii) the fees and expenses payable to
Xxxxxxx X. Xxxxxxxx or any other amounts payable upon a "change in control" of
the Company or in connection with the consummation of the transactions
contemplated herein, (iv) the adverse consequences on the Taxes payable by the
Company, the Surviving Corporation and/or the Acquiror as a result of the
payment of the amounts described in the preceding clause (iii), (v) all amounts
paid or payable in connection with the extension of the Company's directors' and
officers' liability insurance coverage pursuant to Section 7.6(d) hereof, and
(vi) fees, costs and expenses described on Schedule 10.3(l).
SECTION 10.4. Headings.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
SECTION 10.5. Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy or other
judgment, decree, injunction or order, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 10.6. Entire Agreement.
This Agreement (together with the Exhibits, the Disclosure Schedules and
the other documents delivered pursuant hereto) and the Option Agreement and the
Confidentiality Agreement constitute the entire agreement of the parties and
supersede all prior agreements and undertakings, both written and oral, between
the parties, or any of them, with respect to the subject matter hereof and,
except as otherwise expressly provided herein, are not intended to confer upon
any other Person any rights or remedies hereunder.
SECTION 10.7. Specific Performance.
The transactions contemplated by this Agreement are unique. Accordingly,
the Company acknowledges and agrees that, in addition to all other remedies to
which
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Acquiror or Merger Sub may be entitled, each of Acquiror and Merger Sub shall be
entitled to a decree of specific performance.
SECTION 10.8. Assignment.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other party.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
SECTION 10.9. Third Party Beneficiaries.
Subject to Section 10.8, this Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 10.10. Governing Law.
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 law.
SECTION 10.11. Counterparts.
This Agreement may be executed and delivered in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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59
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed and delivered as of the date first written above.
KING PHARMACEUTICALS, INC.
By: /s/ XXXX X. XXXXXXX
Name: Xxxx X. Xxxxxxx
Title: Chairman of the Board &
Chief Executive Officer
MEDCO RESEARCH, INC.
By: /s/ XXXXXXX X. XXXXXXXX
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman
MERLIN ACQUISITION I CORP.
By: /s/ XXXX X. XXXXXXX
Name: Xxxx X. Xxxxxxx
Title: President
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INDEX OF DEFINED TERMS
SECTION
-----------
Acquiror.................................................... PREAMBLE
Acquiror Common Stock....................................... 2.1(a)
Acquiror Permits............................................ 5.10
Acquiror Environmental Claim................................ 5.14(d)
Acquiror Environmental Permits.............................. 5.14(a)
Acquiror SEC Reports........................................ 5.6(a)
Acquiror Stock Option Plans................................. 5.3(a)
Acquiror Subsidiary and Acquiror Subsidiaries............... 5.1
Acquiror Transaction Expenses............................... 9.5(e)
Acquisition Proposal........................................ 7.8(b)
Affiliate................................................... 10.3(a)
Agreement................................................... PREAMBLE
Average Closing Price....................................... 2.1(a)
beneficial owner, beneficial ownership or beneficially
own....................................................... 10.3(b)
Benefit Plans............................................... 3.15(a)
Blue Sky Laws............................................... 3.5(b)
Business Day................................................ 10.3(c)
Cash-on-Hand Condition...................................... 8.4
Certificate and Certificates................................ 2.2(b)
Certificate of Merger....................................... 1.2
Claim....................................................... 7.6(b)
Closing..................................................... 1.6
Closing Date................................................ 1.6
COBRA....................................................... 3.15(g)
Code........................................................ RECITALS
Company..................................................... PREAMBLE
Company Benefit Plans....................................... 3.15(a)
Company Common Stock........................................ RECITALS
Company Commonly Controlled Entity.......................... 3.15(a)
Company Environmental Claim................................. 3.18(d)(i)
Company Environment Permits................................. 3.18(a)
Company ERISA Plan.......................................... 3.15(a)
Company Insiders............................................ 7.18(c)
Company Intellectual Property............................... 3.13(a)
Company Material Contracts.................................. 3.14(a)
Company Permits............................................. 3.10
Company Preferred Stock..................................... 3.3(a)
Company SEC Reports......................................... 3.6(a)
Company Stock Option Plan................................... 2.3(a)
Company Stockholder Approval................................ 3.4
Company Stockholders Meeting................................ 7.3(b)
Company Subsidiary and Company Subsidiaries................. 3.1(a)
Confidentiality Agreement................................... 7.2
control, controlled by, under common control with........... 10.3(d)
CSA......................................................... 3.27(a)
Current Cash Reserves....................................... 3.28
DEA......................................................... 3.27(a)
Delaware Law................................................ RECITALS
Due Investigation........................................... 3.13(a)
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SECTION
-----------
Effective Time.............................................. 1.2
Encumbrance................................................. 10.3(e)
Environmental Laws.......................................... 3.18(d)(ii)
ERISA....................................................... 3.15(a)
Exchange Act................................................ 3.5(b)
Exchange Agent.............................................. 2.2(a)
Exchange Fund............................................... 2.2(a)
Exchange Ratio.............................................. 2.1(a)
Extended Termination Date................................... 8.2(f)
FDA......................................................... 3.5(b)
FDCA........................................................ 3.27(a)
Fujisawa.................................................... 8.2(f)
GAAP........................................................ RECITALS
Governmental Entity......................................... 3.5(b)
Hazardous Materials......................................... 3.18(d)(iii)
HIPAA....................................................... 3.15(g)
HSR Act..................................................... 3.5(b)
Indebtedness................................................ 10.3(f)
Indemnified Parties......................................... 7.6(b)
Intellectual Property....................................... 10.3(g)
Interim Period.............................................. 7.1
Material Adverse Effect..................................... 10.3(h)
Merger...................................................... 1.1
Merger Consideration........................................ 2.1(a)
Merger Sub.................................................. PREAMBLE
Multiemployer Plan.......................................... 3.15(d)
Nasdaq...................................................... 2.1(a)
NASD........................................................ 4.4(b)
NYSE........................................................ 3.5(b)
Option...................................................... 2.3(a)
Option Agreement............................................ RECITALS
Parachute Gross Up Payment.................................. 3.15(f)
Person...................................................... 10.3(i)
Pharmaceutical Product...................................... 3.27(a)
PHSA........................................................ 3.27(a)
Product Licensee............................................ 3.27(a)
Proxy Statement/Prospectus.................................. 3.25
Real Property Leases........................................ 3.14(a)
reasonable efforts.......................................... 10.3(j)
Receiving Party............................................. 7.2
Registration Statement...................................... 3.25
Representatives............................................. 7.8(a)
Requisite Acquiror Approval................................. 5.4
Rights...................................................... 3.3
Rights Agreement............................................ 3.3
Sanofi...................................................... 8.2(f)
SEC......................................................... 3.6(a)
Section 16 Information...................................... 7.18(b)
Securities Act.............................................. 3.5(b)
Subsidiary.................................................. 3.1(b)
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SECTION
-----------
Superior Proposal........................................... 7.8(c)
Surviving Corporation....................................... 1.1
Tax, Taxable and Taxes...................................... 10.3(k)
Tax Returns................................................. 5.12
Terminating Acquiror Breach................................. 9.1(c)
Terminating Company Breach.................................. 9.1(b)
Termination Fee............................................. 9.5(b)
Transaction Expenses........................................ 10.3(l)
Twenty Day Average Price.................................... 9.1(l)
Twenty Day Period........................................... 9.1(l)
Voting Agreement............................................ RECITALS
1997 Plan................................................... 5.3(a)
1998 Plan................................................... 5.3(a)
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