EXHIBIT 2.1
______________________
AGREEMENT AND PLAN OF MERGER
______________________
AMONG
DENDREON CORPORATION
AND
SEAHAWK ACQUISITION, INC.
AND
CHARGER PROJECT LLC
AND
CORVAS INTERNATIONAL, INC
______________________
DATED FEBRUARY 24, 2003
TABLE OF CONTENTS
Page
ARTICLE I THE COMBINATION...............................................2
1.01. Effective Time of the Merger......................................2
1.02. Closing...........................................................2
1.03. Effects of the Merger.............................................2
1.04. The LLC Merger....................................................3
1.05. Effects of the Merger.............................................3
ARTICLE II CONVERSION OF SECURITIES......................................4
2.01. Conversion of Capital Stock.......................................4
2.02. Conversion of Securities in LLC Merger............................5
2.03. Exchange of Certificates..........................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CORVAS......................7
3.01. Organization of Corvas............................................7
3.02. Corvas Capital Structure..........................................7
3.03. Authority, No Conflict, Required Filings and Consents.............8
3.04. SEC Filings; Financial Statements.................................9
3.05. No Undisclosed Liabilities.......................................10
3.06. Absence of Certain Changes or Events.............................10
3.07. Taxes............................................................11
3.08. Tangible Properties..............................................11
3.09. Intellectual Property............................................12
3.10. Agreements, Contracts, and Commitments...........................14
3.11. Litigation.......................................................15
3.12. Environmental Matters............................................15
3.13. Regulatory Compliance............................................16
3.14. Employee Benefit Plans...........................................18
3.15. Compliance with Laws.............................................19
3.16. Interested Party Transactions....................................19
3.17. No Existing Discussions..........................................19
3.18. No Secured Debt..................................................20
3.19. Opinion of Financial Advisor.....................................20
i
3.20. Corvas' Tax Representation Relating to Reorganization............20
3.21. Insurance........................................................20
3.22. Employment Matters...............................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF DENDREON, SUB AND LLC......21
4.01. Organization of Dendreon, Sub and LLC............................21
4.02. Dendreon Capital Structure.......................................21
4.03. Authority, No Conflict, Required Filings and Consents............22
4.04. SEC Filings; Financial Statements................................23
4.05. No Undisclosed Liabilities.......................................24
4.06. Absence of Certain Changes or Events.............................24
4.07. Taxes............................................................25
4.08. Tangible Properties..............................................25
4.09. Intellectual Property............................................26
4.10. Agreements, Contracts, and Commitments...........................28
4.11. Litigation.......................................................29
4.12. Environmental Matters............................................29
4.13. Regulatory Compliance............................................30
4.14. Employee Benefit Plans...........................................32
4.15. Compliance with Laws.............................................33
4.16. Interested Party Transactions....................................33
4.17. No Existing Discussions..........................................33
4.18. No Secured Debt..................................................33
4.19. Opinion of Financial Advisor.....................................34
4.20. Dendreon's Tax Representation Relating to Reorganization.........34
4.21. Insurance........................................................34
4.22. Employment Matters...............................................34
4.23. Ownership and Interim Operations of Sub and LLC..................34
ARTICLE V CONDUCT OF BUSINESS..........................................35
5.01. Covenants of Dendreon and Corvas.................................35
5.02. Cooperation......................................................37
ARTICLE VI ADDITIONAL AGREEMENTS AND COVENANTS..........................37
6.01. No Solicitation by Corvas........................................37
ii
6.02. No Solicitation by Dendreon......................................38
6.03. Joint Proxy Statement; Registration Statement....................40
6.04. Access to Information............................................41
6.05. Corvas Stockholders' Meetings...................................41
6.06. Dendreon Stockholders' Meetings.................................43
6.07. Legal Conditions to Merger.......................................44
6.08. Payment of Taxes.................................................44
6.09. Affiliates.......................................................44
6.10. Public Disclosure................................................44
6.11. Tax-Free Reorganization..........................................44
6.12. NASDAQ Quotation.................................................45
6.13. Stock Plans and Other Options....................................45
6.14. Consents.........................................................47
6.15. Brokers or Finders...............................................47
6.16. Employee Benefits; Employee Issues...............................47
6.17. Reports..........................................................48
6.18. Notification of Certain Matters..................................48
6.19. Additional Agreements; Reasonable Efforts........................49
6.20. Continuing Indemnification.......................................49
6.21. Board of Directors of Dendreon...................................49
ARTICLE VII CONDITIONS TO MERGER.........................................50
7.01. Conditions to Each Party's Obligation To Effect the Merger.......50
7.02. Additional Conditions to Obligations of Dendreon and Sub.........50
7.03. Additional Conditions to Obligations of Corvas...................51
ARTICLE VIII TERMINATION AND AMENDMENT....................................52
8.01. Termination......................................................52
8.02. Effect of Termination............................................54
8.03. Fees and Expenses................................................54
8.04. Amendment........................................................56
8.05. Extension; Waiver................................................56
ARTICLE IX MISCELLANEOUS................................................56
9.01. Nonsurvival of Representations, Warranties, and Agreements.......56
iii
9.02. Notices..........................................................56
9.03. Interpretation...................................................57
9.04. Counterparts.....................................................57
9.05. Entire Agreement, No Third Party Beneficiaries...................57
9.06. Governing Law....................................................58
9.07. Assignment.......................................................58
9.08. Definitions......................................................58
iv
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated February 24,
2003, is by and among DENDREON CORPORATION, a Delaware corporation,
("Dendreon"), SEAHAWK ACQUISITION, INC., a Delaware corporation and a wholly
owned subsidiary of Dendreon ("Sub"), CHARGER PROJECT LLC, a Delaware limited
liability company of which Dendreon is the sole member ("LLC") and CORVAS
INTERNATIONAL, INC., a Delaware corporation, ("Corvas").
WHEREAS, the Boards of Directors of each of Dendreon, Sub, and Corvas
and the sole member of LLC deem it advisable and in the best interest of each
entity and its respective stockholders or interest holders that Dendreon and
Corvas combine in order to advance the long-term business interests of Dendreon
and Corvas;
WHEREAS, the strategic combination of Dendreon and Corvas shall be
effected in accordance with the Delaware General Corporation Law (the "Delaware
Law") and the terms of this Agreement through a transaction in which (i) Sub
will merge with and into Corvas (the "Merger"), Corvas will be the surviving
corporation in the Merger and will become a wholly owned subsidiary of Dendreon,
and the stockholders of Corvas will become stockholders of Dendreon, and (ii)
Corvas, as the surviving corporation in the Merger, will merge with and into LLC
(the "LLC Merger"), and LLC will be the surviving entity in the LLC Merger (the
Merger and the LLC Merger being herein referred to as the "Combination";
WHEREAS, the Board of Directors of Corvas (i) has unanimously
determined that the Combination is advisable and consistent with and in
furtherance of the long-term business strategy of Corvas and fair to, and in the
best interests of Corvas and its stockholders, (ii) has unanimously determined
that this Agreement is advisable and has approved this Agreement, the
Combination and the other transactions contemplated by this Agreement, and (iii)
has unanimously determined to recommend that the stockholders of Corvas adopt
this Agreement.
WHEREAS, the Board of Directors of Dendreon (i) has unanimously
determined that the Combination is advisable and consistent with and in
furtherance of the long-term business strategy of Dendreon and is fair to, and
in the best interests of, Dendreon and its stockholders, (ii) has unanimously
approved this Agreement, the Combination and the other transactions contemplated
by this Agreement, and (iii) has unanimously determined to recommend that the
stockholders of Dendreon approve the issuance of shares of Dendreon Common Stock
in connection with the Merger (the "Share Issuance").
WHEREAS, for Federal income tax purposes, it is intended that the
Combination shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement shall constitute a plan of reorganization within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the Treasury Regulations;
WHEREAS, concurrently with the execution of this Agreement, (i) as a
condition and inducement to Dendreon's willingness to enter into this Agreement,
certain stockholders of Corvas are entering into a Lockup and Voting Agreement
whereby such stockholders have agreed to vote their shares of Corvas Common
Stock in favor of the adoption of this Agreement
and as to certain other matters and (ii) as a condition and inducement to
Corvas' willingness to enter into this Agreement, certain stockholders of
Dendreon are entering into a substantially similar Lockup and Voting Agreement
whereby such stockholders have agreed to vote their shares of capital stock of
Dendreon in favor of the Share Issuance and as to certain other matters;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants, and agreements set forth herein and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, the parties hereby agree
as follows:
ARTICLE I
THE COMBINATION
1.01. Effective Time of the Merger. Subject to the provisions of this
Agreement, a certificate of merger giving effect to the agreement of the parties
described in this Article I (the "Certificate of Merger"), shall be duly
executed and acknowledged by the Continuing Corporation (as defined in Section
1.03), and thereafter delivered to the Secretary of State of the State of
Delaware, for filing, as provided in the Delaware Law, as soon as practicable on
or after the Closing Date (as defined in Section 1.02). The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or at such time thereafter as is provided in the
Certificate of Merger (the "Effective Time").
1.02. Closing. The closing of the Merger (the "Closing") will take
place at 9:00 a.m., Pacific time, on a date to be specified by Dendreon and
Corvas (the "Closing Date"), which shall be no later than the second business
day after satisfaction, or written waiver by the party or parties having the
benefit of such conditions, of all the conditions set forth in Article VII
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of such conditions), at the
offices of Stoel Rives LLP, Seattle, Washington, unless another date or place is
agreed to in writing by Dendreon and Corvas. All actions taken at the Closing
shall be deemed to have been taken simultaneously at the time the last of any
such actions is taken or completed.
1.03. Effects of the Merger.
(a) At the Effective Time (i) the separate existence of Sub shall cease
and Sub shall be merged with and into Corvas, with Corvas as the surviving
corporation in the Merger (Sub and Corvas are sometimes referred to below as the
"Constituent Corporations" and Corvas is sometimes referred to below as the
"Continuing Corporation"), (ii) the Certificate of Incorporation of Corvas shall
be amended so that Section IV of such Certificate of Incorporation reads in its
entirety as follows: "The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 1,000, all of which shall
consist of Common Stock, par value $0.01 per share," and as so amended, such
Certificate of Incorporation shall be the Certificate of Incorporation of the
Continuing Corporation, and (iii) the Bylaws of Corvas as in effect immediately
prior to the Effective Time shall be the Bylaws of the Continuing Corporation.
2
(b) At and after the Effective Time, the Continuing Corporation shall
possess all the rights, privileges, powers, and franchises of a public as well
as of a private nature, and be subject to all the restrictions, disabilities,
and duties of each of the Constituent Corporations; and all and singular rights,
privileges, powers, and franchises of each of the Constituent Corporations, and
all property, real, personal, and mixed, and all debts due to either of the
Constituent Corporations on whatever account, as well as for stock subscriptions
and all other things in action or belonging to each of the Constituent
Corporations, shall be vested in the Continuing Corporation, and all property,
rights, privileges, powers, and franchises, and all and every other interest
shall be thereafter as effectually the property of the Continuing Corporation as
they were of the Constituent Corporations, and the title to any real estate
vested by deed or otherwise, in either of the Constituent Corporations, shall
not revert or be in any way impaired; but all rights of creditors and all liens
upon any property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities, and duties of the Constituent
Corporations shall thereafter attach to the Continuing Corporation, and may be
enforced against it to the same extent as if such debts and liabilities had been
incurred by it.
1.04. The LLC Merger. Immediately following the Effective Time of the
Merger, Dendreon shall cause LLC to file with the Secretary of State of the
State of Delaware a properly executed certificate of merger for the LLC Merger
(the "LLC Certificate of Merger") conforming to the requirements of the Delaware
Law. The LLC Merger shall become effective at the time the LLC Certificate of
Merger is filed with the Secretary of State of the State of Delaware.
1.05. Effects of the LLC Merger.
(a) At the time at which the LLC Merger is filed with the Secretary of
State of Delaware, as described in Section 1.04 (the "LLC Effective Time"), (i)
the separate existence of Corvas shall cease and Corvas shall be merged with and
into LLC, with LLC as the surviving entity in the LLC Merger (LLC and Corvas are
sometimes referred to below as the "LLC Constituent Entities" and LLC is
sometimes referred to below as the "Continuing LLC"), and (ii) the Certificate
of Formation and the Operating Agreement of LLC as in effect immediately prior
to the Effective Time shall be unchanged by the LLC Merger.
(b) At and after the LLC Effective Time, the Continuing LLC shall
possess all the rights, privileges, powers, and franchises of a public as well
as of a private nature, and be subject to all the restrictions, disabilities,
and duties of each of the LLC Constituent Entities; and all and singular rights,
privileges, powers, and franchises of each of the LLC Constituent Entities, and
all property, real, personal, and mixed, and all debts due to either of the LLC
Constituent Entities on whatever account, and all other things in action or
belonging to each of the LLC Constituent Entities, shall be vested in the
Continuing LLC, and all property, rights, privileges, powers, and franchises,
and all and every other interest shall be thereafter as effectually the property
of the Continuing LLC as they were of the LLC Constituent Entities, and the
title to any real estate vested by deed or otherwise, in either of the LLC
Constituent Entities, shall not revert or be in any way impaired; but all rights
of creditors and all liens upon any property of either of the LLC Constituent
Entities shall be preserved unimpaired, and all debts, liabilities, and duties
of the LLC Constituent Entities shall thereafter attach to the Continuing LLC,
and
3
may be enforced against it to the same extent as if such debts and liabilities
had been incurred by it.
ARTICLE II
CONVERSION OF SECURITIES
2.01. Conversion of Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Corvas Common Stock or capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, $0.01 par value per share, of the
Continuing Corporation.
(b) Cancellation of Corvas Common Stock. All shares of Corvas Common
Stock (i) that are held by Corvas as treasury stock or otherwise or (ii) that
are held by Dendreon or Sub ((i) and (ii), collectively, "Excluded Shares")
shall be canceled and retired and shall cease to exist and no stock of Dendreon
or other consideration shall be delivered in exchange therefor.
(c) Exchange Ratio for Corvas Common Stock. Subject to Section 2.02,
each issued and outstanding share of Corvas Common Stock, other than Excluded
Shares, together with all Rights under the Corvas Rights Agreement (as such
terms are defined in Section 3.02(a)) attached to such share shall be converted
into the right to receive 0.45 shares (the "Conversion Number") of Dendreon
Common Stock, together with the associated Rights under the Dendreon Rights
Agreement. The Conversion Number shall be appropriately adjusted to reflect any
stock split, stock dividend, recapitalization, exchange, subdivision,
combination of, or other similar change (including the exercise of any Rights
under the Corvas Rights Agreement or the Dendreon Rights Agreement (as defined
in Section 4.02(a)) in Dendreon Common Stock or Corvas Common Stock following
the date of this Agreement. All shares of Dendreon Common Stock into which the
shares of Corvas Common Stock and attached Rights are converted shall be fully
paid and nonassessable and will have Rights attached thereto in accordance with
the Dendreon Rights Agreement. All shares of Corvas Common Stock, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and holders of certificates which
immediately prior to the Effective Time represented shares of Corvas Common
Stock (the "Certificates") shall cease to have any rights with respect thereto,
except the right to receive the shares of Dendreon Common Stock and any cash in
lieu of fractional shares of Dendreon Common Stock to be issued or paid in
consideration therefor upon the surrender of the Certificates in accordance with
Section 2.02, without interest.
(d) Fractional Shares. No scrip or fractional shares of Dendreon Common
Stock shall be issued in the Merger. All fractional shares of Dendreon Common
Stock to which a holder of Corvas Common Stock immediately prior to the
Effective Time would otherwise be entitled at the Effective Time shall be
aggregated. If a fractional share results from such aggregation, such
shareholder shall be entitled after the later of (i) the Effective Time or (ii)
the surrender of such shareholder's Certificate or Certificates, to receive from
Dendreon an amount in cash in lieu of such fractional share, based on the
closing sale prices of Dendreon Common Stock on the
4
Nasdaq National Market on the Closing Date. Dendreon will make available to the
"Exchange Agent" (as defined in Section 2.02) the cash necessary for the purpose
of paying for fractional shares.
(e) Corvas Stock Options. At the Effective Time, all then outstanding
options to purchase Corvas Common Stock under Corvas' employee stock incentive
plans listed in Schedule 3.02 of the Corvas Disclosure Schedule (collectively,
the "Corvas Option Plans") and all outstanding other options to purchase Corvas
Common Stock listed in Schedule 3.02 of the Corvas Disclosure Schedule
(collectively, the "Corvas Non-Plan Options") will be assumed by Dendreon in
accordance with Section 6.13.
2.02. Conversion of Securities in LLC Merger. By virtue of the LLC
Merger and without any further action on the part of the Continuing Corporation,
LLC or Continuing LLC, (i) each limited liability company interest of LLC then
outstanding shall remain outstanding and each certificate therefor shall
continue to evidence one limited liability company interest of the Surviving LLC
and (ii) each share of common stock of the Continuing Corporation then
outstanding shall be converted into limited liability company interest of the
Surviving LLC.
2.03. Exchange of Certificates.
(a) Dendreon shall authorize Mellon Investor Services LLC, or such
other firm as is reasonably acceptable to Corvas, to serve as exchange agent
hereunder (the "Exchange Agent"). Promptly after the Effective Time, Dendreon
shall deposit or shall cause to be deposited in trust with the Exchange Agent
certificates representing the number of whole shares of Dendreon Common Stock to
which the holders of Corvas Common Stock are entitled pursuant to this Article
II, together with cash sufficient to pay for fractional shares then known to
Dendreon (such cash amounts and certificates being hereinafter referred to as
the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions received from Dendreon, deliver the number of shares of Dendreon
Common Stock and pay the amounts of cash provided for in Section 2.01 out of the
Exchange Fund. Additional amounts of cash, if any, needed from time to time by
the Exchange Agent to make payments for fractional shares shall be provided by
Dendreon and shall become part of the Exchange Fund. The Exchange Fund shall not
be used for any other purpose, except as provided in this Agreement, or as
otherwise agreed to by Dendreon, Sub, and Corvas prior to the Effective Time.
(b) As soon as practicable after the Effective Time, the Exchange Agent
shall mail and otherwise make available to each record holder who, as of the
Effective Time, was a holder of a Certificate a form of letter of transmittal
and instructions for use in effecting the surrender of the Certificate for
payment therefor and conversion thereof. Delivery shall be effected, and risk of
loss and title to the Certificate shall pass, only upon proper delivery of the
Certificate to the Exchange Agent and the form of letter of transmittal shall so
reflect. Upon surrender to the Exchange Agent of a Certificate, together with
such letter of transmittal duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor (i) one or more certificates as
requested by the holder (properly issued, executed, and countersigned, as
appropriate) representing that number of whole shares of Dendreon Common Stock
to which such holder of Corvas Common Stock shall have become entitled pursuant
to the provisions of Section 2.01, and (ii) as to any fractional share, a check
representing the cash consideration to
5
which such holder shall have become entitled pursuant to Section 2.01(d) and the
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on the cash payable upon surrender of the Certificate. Dendreon shall
pay any transfer or other taxes required by reason of the issuance of a
certificate representing shares of Dendreon Common Stock provided that such
certificate is issued in the name of the person in whose name the Certificate
surrendered in exchange therefor is registered; provided, however, that Dendreon
shall not pay any transfer or other tax if the obligation to pay such tax under
applicable law is solely that of the stockholder or if payment of any such tax
by Dendreon otherwise would cause the Combination to fail to qualify as a
reorganization under the Code. If any portion of the consideration to be
received pursuant to this Article II upon exchange of a Certificate (whether the
consideration to be received is a certificate representing shares of Dendreon
Common Stock or a check representing cash for a fractional share) is to be
issued or paid to a person other than the person in whose name the Certificate
surrendered in exchange therefor is registered, it shall be a condition of such
issuance and payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
such exchange shall pay in advance any transfer or other taxes required by
reason of the issuance of a certificate representing shares of Dendreon Common
Stock or a check representing cash for a fractional share to such other person,
or establish to the satisfaction of the Exchange Agent that such tax has been
paid or that no such tax is applicable. From the Effective Time until surrender
in accordance with this Section 2.03, each Certificate (other than Certificates
representing treasury shares of Corvas) shall be deemed, for all corporate
purposes other than the payment of dividends or other distributions, to evidence
the ownership of the number of whole shares of Dendreon Common Stock into which
such shares of Corvas Common Stock shall have been so converted. No dividends
that are otherwise payable on Dendreon Common Stock will be paid to persons
entitled to receive Dendreon Common Stock until such persons surrender their
Certificates. After such surrender, there shall be paid to the person in whose
name the Dendreon Common Stock shall be issued any dividends on such Dendreon
Common Stock that shall have a record date on or after the Effective Time and
prior to such surrender. If the payment date for any such dividend is after the
date of such surrender, such payment shall be made on such payment date. In no
event shall the persons entitled to receive such dividends be entitled to
receive interest on such dividends. All payments in respect of shares of Corvas
Common Stock that are made in accordance with the terms hereof shall be deemed
to have been made in full satisfaction of all rights pertaining to such
securities.
(c) In case of any lost, mislaid, stolen, or destroyed Certificate, the
holder thereof may be required, as a condition precedent to the delivery to such
holder of the consideration described in Section 2.01 and in accordance with
Section 167 of the Delaware Law, to deliver to Dendreon a bond in such
reasonable sum as Dendreon may direct as indemnity against any claim that may be
made against the Exchange Agent, Dendreon, or the Continuing Corporation with
respect to the Certificate alleged to have been lost, mislaid, stolen, or
destroyed.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Continuing Corporation of the shares of Corvas Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Continuing Corporation for
transfer, they shall be canceled and exchanged for the consideration described
in Section 2.01. After the Effective Time, the shares of Corvas Common Stock
shall be delisted from the Nasdaq National Market.
6
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Corvas for six months after the Effective Time shall be returned
to Dendreon, upon demand, and any holder of Corvas Common Stock who has not
theretofore complied with Section 2.03(b) shall thereafter look only to Dendreon
for issuance of the number of shares of Dendreon Common Stock and other
consideration to which such holder has become entitled pursuant to Section 2.01,
provided, however, that neither the Exchange Agent nor any party hereto shall be
liable to a holder of shares of Corvas Common Stock for any amount required to
be paid to a public official pursuant to any applicable abandoned property,
escheat, or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CORVAS
Corvas represents and warrants to Dendreon, Sub and LLC that the
statements contained in this Article III are true and correct as of the date
hereof, except as set forth in the Disclosure Schedule delivered by Corvas to
Dendreon on or before the date of this Agreement (the "Corvas Disclosure
Schedule"). The Corvas Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
III and the disclosures in any paragraph, including appropriate cross
references, shall qualify only the corresponding paragraph in this Article III.
3.01. Organization of Corvas. Corvas is a corporation duly organized,
validly existing, and in good standing under the Delaware Law, has all requisite
corporate power to own, lease, and operate its property and to carry on its
business as now being conducted, and is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the failure
to be so qualified would have a Material Adverse Effect on Corvas. Corvas does
not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture, or other business association or entity excluding
securities in any publicly traded company held for investment by Corvas and
comprising less than one percent of the outstanding equity of such company.
3.02. Corvas Capital Structure.
(a) The authorized capital stock of Corvas consists of 75,000,000
shares of Common Stock, $0.001 par value ("Corvas Common Stock"), and 10,000,000
shares of Preferred Stock, $0.001 par value ("Corvas Preferred Stock"). On
February 21, 2003, (i) 27,590,647 shares of Corvas Common Stock were
outstanding, all of which were validly issued, fully paid, and nonassessable,
(ii) no shares of Corvas Common Stock were held in the treasury of Corvas, (iii)
4,197,060 shares of Corvas Common Stock were reserved for future issuance
pursuant to stock options granted and outstanding or available for grant under
the Corvas Option Plans, (iv) an aggregate of 45,000 shares of Corvas Common
Stock were reserved for future issuance pursuant to granted and outstanding
Corvas Non-Plan Options, (v) 4,483,707 shares of Corvas Common Stock were
reserved for future issuance pursuant to the terms of Corvas' outstanding 5.5%
Convertible Senior Subordinated Notes (the "Notes"), and (vi) 500,000 shares of
Corvas Series C Junior Participating Preferred Stock were reserved for future
issuance upon exercise of rights ("Rights") granted under the Rights Agreement,
dated as of September 18, 1997, between
7
Corvas and American Stock Transfer and Trust Company (the "Corvas Rights
Agreement"). The Corvas Rights Agreement has not been amended. Since February
21, 2003, no shares of Corvas Common Stock have been issued except pursuant to
the exercise of options granted under the Corvas Option Plans, nor has Corvas
become obligated to issue any additional shares of Corvas Common Stock other
than pursuant to additional grants of options under the Corvas Option Plans,
each of which grants has been made in the ordinary course of Corvas' business
and in accordance with existing policies. None of the shares of Corvas Preferred
Stock are issued and outstanding and Corvas is not obligated to issue any such
shares except upon exercise of Rights granted under the Corvas Rights Plan.
There are no obligations, contingent or otherwise, of Corvas to repurchase,
redeem, or otherwise acquire any shares of Corvas Common Stock or to provide
funds to or make any investment (in the form of a loan, capital contribution, or
otherwise) in any other entity.
(b) Except as set forth in this Section 3.02, there are no (i) equity
securities of any class of Corvas, or any security exchangeable into or
exercisable for such equity securities issued, reserved for issuance, or
outstanding, (ii) options, warrants, equity securities, calls, rights,
commitments, or agreements of any character to which Corvas is a party or by
which it is bound obligating Corvas to issue, deliver, or sell, or cause to be
issued, delivered, or sold, additional shares of capital stock of Corvas or
obligating Corvas, to grant, extend, accelerate the vesting of, or enter into
any such option, warrant, equity security, call, right, commitment, or agreement
((i) and (ii) collectively, "Corvas Stock Rights"). Corvas is not a party to,
nor is Corvas aware of, any voting agreement, voting trust, proxy, or other
agreements or understandings with respect to the shares of capital stock of
Corvas or any agreement, arrangement, or understanding providing for
registration rights with respect to any shares of capital stock of Corvas.
(c) As of January 31, 2003, there were outstanding $12.63 million in
aggregate principal amount of Notes and interest accreted thereon and any
applicable withholding taxes that may be incurred in connection with accreted
interest. As provided therein, the principal and interest payable on the Notes
is convertible into Corvas Common Stock; the conversion price of $3.25 per share
has not been adjusted in any respect. Corvas has not agreed, directly or
indirectly, to any modification or amendment of any term of the Notes since
their issuance.
3.03. Authority, No Conflict, Required Filings and Consents.
(a) Corvas has all requisite corporate power and authority to enter
into this Agreement and (subject to obtaining the Required Corvas Stockholder
Vote (as defined in Section 3.03(d))) to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
Corvas and the consummation of the transactions by Corvas contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of Corvas, subject only to the approval of the Merger by Corvas'
stockholders under the Delaware Law. This Agreement has been duly executed and
delivered by Corvas and constitutes the valid and binding obligation of Corvas,
enforceable in accordance with its terms, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws affecting the
rights of creditors generally and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
8
(b) The execution and delivery of this Agreement by Corvas does not,
and, subject to obtaining the Required Corvas Stockholder Vote, the consummation
of the transactions contemplated by this Agreement by Corvas will not, (i)
conflict with, or result in any violation or breach of any provision of the
Certificate of Incorporation or Bylaws of Corvas, (ii) result in any violation
or breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to right of termination, cancellation, or acceleration of
any obligation or loss of any benefit) under any of the terms, conditions, or
provisions of any note, bond, mortgage, indenture, or lease or any material
contract, or other material agreement, instrument, or obligation to which Corvas
is a party or by which Corvas or any of its properties or assets may be bound,
or (iii) conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule, or regulation applicable
to Corvas or any of its properties or assets, except in the case of each of (ii)
and (iii) for any breach, violation or conflict which would not have a Material
Adverse Effect on Corvas.
(c) No consent, approval, order, or authorization of, or registration,
declaration, or filing with, any court, administrative agency, or commission or
other governmental authority or instrumentality ("Governmental Entity"), is
required by or with respect to Corvas in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing of a Registration Statement on Form S-4 with
the Securities and Exchange Commission ("SEC") in accordance with the Securities
Act of 1933, as amended (the "Securities Act"), (ii) the filing of the
Certificate of Merger and the LLC Certificate of Merger with the Secretary of
State of the State of Delaware, and (iii) the filing of the Joint Proxy
Statement (as defined in Section 6.02(a) below) with the SEC in accordance with
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(d) The affirmative vote of the holders of a majority of the shares of
Corvas Common Stock outstanding on the record date for the Corvas Stockholders'
Meeting (the "Required Corvas Stockholder Vote") is the only vote of the holders
of any class or series of Corvas' capital stock necessary for Corvas to effect
the Merger and consummate the transactions contemplated in this Agreement.
3.04. SEC Filings; Financial Statements.
(a) Corvas has filed all forms, reports, and documents required to be
filed by Corvas with the SEC since January 1, 1999 (including all exhibits,
notes, and schedules thereto and documents incorporated by reference therein)
(collectively, the "Corvas SEC Reports"). The Corvas SEC Reports (i) at the time
filed, with respect to all of the Corvas SEC Reports other than registration
statements filed under the Securities Act, or at the time of their respective
effective dates, with respect to registration statements filed under the
Securities Act, complied as to form in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not at the time filed or at the time of their respective effective
dates, as the case may be (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Corvas SEC Reports or necessary in order to make the statements
in such Corvas SEC Reports, in the light of the circumstances under which they
were made, not misleading.
9
(b) Each of the financial statements (including, in each case, any
related notes) contained in the Corvas SEC Reports at the time filed or at the
time of their respective effective dates, as the case may be, complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly presented the financial position of Corvas at
the respective dates and the results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments. The balance sheet
of Corvas as of September 30, 2002 included in Corvas' Quarterly Report on Form
10-Q filed with the SEC with respect to the quarter then ended is referred to
herein as the "Corvas Balance Sheet."
(c) Corvas has in place the "disclosure controls and procedures" (as
defined in Rules 13a-14(c) and 15d-14(c) of the Exchange Act) required in order
for the Chief Executive Officer and Principal Financial and Accounting Officer
of Corvas to engage in the review and evaluation process mandated by the
Exchange Act. Corvas' "disclosure controls and procedures" are reasonably
designed to ensure that all information (both financial and non-financial)
required to be disclosed by Corvas in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that all such
information is accumulated and communicated to Corvas' management as appropriate
to allow timely decisions regarding required disclosure and to make the
certifications of the Chief Executive Officer and Principal Financial and
Accounting Officer of Corvas required under the Exchange Act with respect to
such reports.
3.05. No Undisclosed Liabilities. Except as set forth in Schedule 3.05
of the Corvas Disclosure Schedule or as otherwise disclosed in the Corvas SEC
Reports, Corvas does not have any liabilities, either accrued or contingent
(whether or not required to be reflected in financial statements in accordance
with generally accepted accounting principles), and whether due or to become
due, which individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect on Corvas, other than (i) liabilities reflected
in the Corvas Balance Sheet, (ii) obligations to perform under contracts either
disclosed in the Corvas SEC Reports or in the Corvas Disclosure Schedule, and
(iii) normal or recurring liabilities incurred since the date of the Corvas
Balance Sheet, in the ordinary course of business consistent with past
practices.
3.06. Absence of Certain Changes or Events. Since the date of the
Corvas Balance Sheet, Corvas has conducted its business only in the ordinary
course and in a manner consistent with past practice and, since such date, there
has not been (i) any Material Adverse Effect on Corvas, (ii) any damage,
destruction, or loss (whether or not covered by insurance) with respect to any
property of Corvas having a Material Adverse Effect on Corvas, (iii) any
material change by Corvas in its accounting methods, principles, or practices to
which Dendreon has not previously consented in writing, (iv) any revaluation by
Corvas or any of its assets having a Material Adverse Effect on Corvas, or (v)
except as disclosed in Schedule 3.06 of the Corvas Disclosure Schedule, any
other action or event that would have required the consent of Dendreon pursuant
to Section 5.01 of this Agreement had such action or event occurred after the
date of this Agreement.
10
3.07. Taxes.
(a) All returns and reports, including without limitation information
and withholding returns and reports (collectively, "Tax Returns"), of or
relating to any foreign, Federal, state, local or other income, premium,
property, sales, excise and other taxes of any nature whatsoever, including any
interest, penalties and additions to tax in respect thereof ("Tax" or "Taxes")
heretofore required to be filed by Corvas have been duly filed on a timely
basis. All such Tax Returns were complete and accurate in all material respects.
Corvas has paid or has made adequate provision for the payment of all Taxes.
(b) As of the date of this Agreement there are no audits or
administrative proceedings, court proceedings or claims pending against Corvas
with respect to any Taxes, no assessment, deficiency or adjustment has been
asserted or, to the knowledge of Corvas, proposed with respect to any Tax Return
of or with respect to Corvas and there are no liens for Taxes upon the assets or
properties of Corvas, except liens for Taxes not yet delinquent.
(c) There are not in force any waivers of agreements, arrangements, or
understandings by or with respect to Corvas of or for an extension of time for
the assessment or payment of any Taxes. Corvas has not received a written ruling
of a taxing authority relating to Taxes or entered into a written and legally
binding agreement with a taxing authority relating to Taxes that would have a
continuing effect after the Closing Date. Corvas is not required to include in
income any adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by Corvas, and to the knowledge
of Corvas the IRS has not proposed any such adjustment or change in accounting
method.
(d) To the knowledge of Corvas, Corvas has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, creditor, independent contractor or other third party.
(e) Corvas has not filed a consent under Section 341(f) of the Code.
Corvas is not a party to any Tax allocation or Tax sharing arrangements.
3.08. Tangible Properties.
(a) Real Property. Corvas has provided or made available to Dendreon a
true and complete list of all real property owned by Corvas and real property
leased pursuant to leases ("Leases") by Corvas as of the date hereof, and the
name of the lessor, the date of the Lease and each amendment to the Lease, and
the aggregate annual rental or other fees payable under any such Lease. All such
Leases are valid and binding obligations of Corvas and, to Corvas' knowledge, of
each other party thereto, in accordance with their respective terms, as those
terms are reflected in documents provided to Dendreon, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting the rights of creditors generally and (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies, and Corvas
is not in material default under any such Lease.
(b) Tangible Personal Property. All material items of tangible personal
property of Corvas are in good operating condition and repair (ordinary wear and
tear excepted), are performing satisfactorily, and are available for use in the
conduct of Corvas' business. Corvas
11
has and will have good and marketable title to all of material personal property
owned by it, free and clear of all security interests, mortgages, liens,
pledges, charges, valid claims or encumbrances of any kind or character other
than liens (i) for taxes not yet due and payable; or (ii) incurred in the
ordinary course of Corvas' business that do not, individually or in the
aggregate, have a Material Adverse Effect on Corvas.
3.09. Intellectual Property.
(a) Ownership of Intellectual Property Assets. Corvas owns or has valid
rights or licenses to use all of the Corvas Intellectual Property Assets. All
Corvas Intellectual Property Assets are free and clear of all mortgages,
pledges, charges, liens, equities, security interests or other encumbrances, and
Corvas has the right to use without payment to a third party all of such Corvas
Intellectual Property Assets. No claim is pending against Corvas or, to Corvas'
knowledge, threatened against Corvas or its officers, employees or consultants
to the effect that Corvas' right, title and interest in and to any of the Corvas
Intellectual Property Assets is invalid or unenforceable by Corvas. Corvas is
not aware of any material information that would adversely affect the validity
or enforceability of any of the Patents, Marks, Trade Secrets or Copyrights
which constitute Corvas Intellectual Property Assets. All former and current
employees, consultants and contractors of Corvas who were involved in, or who
contributed to, the creation or development of any of the Corvas Intellectual
Property Assets have executed written instruments with Corvas that assign to
Corvas all of such Person's rights to any inventions, improvements, discoveries,
writings or information constituting Corvas Intellectual Property Assets. To the
knowledge of Corvas, no employee of Corvas has entered into any agreement that
restricts or limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign or disclose
information concerning his work to anyone other than Corvas. A complete list of
Corvas Products is provided in Section 3.09(a) of the Corvas Disclosure
Schedule.
(b) Patents. Schedule 3.09(b) of the Corvas Disclosure Schedule sets
forth a complete and accurate list of all Patents constituting Corvas
Intellectual Property Assets. All of such Patents are currently in compliance
with formal governmental legal requirements (including, without limitation,
payment of filing, examination and maintenance fees and proofs of working or
use.) All of such issued Patents are valid and enforceable. In each case where
such an issued Patent is held by Corvas by assignment, the assignment has been
duly recorded with the U.S. Patent and Trademark Office and all other
jurisdictions of registration. No such issued Patent or patent application has
been or is now involved in any interference, reissue, reexamination or
opposition proceeding. To Corvas' knowledge, there is no potentially interfering
patent or patent application of any third party that has had or would reasonably
be expected to have a Material Adverse Effect on Corvas. All Corvas Products
made, used or sold under the Patents have been marked with the proper patent
notice.
(c) Trademarks. Schedule 3.09(c) of the Corvas Disclosure Schedule sets
forth a complete and accurate list of all Marks constituting Corvas Intellectual
Property Assets. All such Marks that have been registered with the U. S. Patent
and Trademark Office or any other jurisdiction are currently in compliance with
formal governmental legal requirements (including, without limitation, the
timely post-registration filing of affidavits of use and incontestability and
renewal applications), and are, to Corvas' knowledge, valid and enforceable in
the jurisdictions
12
in which they are registered. In each case where such a Xxxx is held by Corvas
by assignment, the assignment has been duly recorded with the U.S. Patent and
Trademark Office and all other jurisdictions of registration. No such Xxxx has
been or is now involved in any opposition, invalidation or cancellation
proceeding and, to Corvas' knowledge, no such action is threatened against
Corvas with respect to any of such Marks. All Corvas Products and materials
containing a Xxxx xxxx the proper notice where required by law.
(d) Copyrights. Corvas does not have any Copyrights registered with the
U. S. Copyright Office.
(e) Trade Secrets. Corvas has taken all reasonable security measures
(including, without limitation, entering into appropriate confidentiality and
nondisclosure agreements with all officers, directors, employees and consultants
of Corvas and any other Persons with access to the Trade Secrets constituting
Corvas Intellectual Property Assets) to protect the secrecy, confidentiality and
value of the Trade Secrets constituting Corvas Intellectual Property Assets. To
the knowledge of Corvas, there has not been any breach by any party to any such
confidentiality or non-disclosure agreement. The Trade Secrets constituting
Corvas Intellectual Property Assets have not been disclosed by Corvas to any
Person other than employees or contractors of Corvas who had a need to know and
use such Trade Secrets in the course of their employment or contract
performance, or to other persons under confidentiality and non-disclosure
agreements. To the knowledge of Corvas, Corvas has the right to use, free and
clear of claims of third parties, all Trade Secrets constituting Corvas
Intellectual Property Assets. To the knowledge of Corvas, no third party has
asserted that the use by Corvas of any Trade Secret constituting Corvas
Intellectual Property Assets violates the rights of such third party.
(f) Exclusivity of Rights. Corvas has the exclusive right to use,
license, distribute, transfer and bring infringement actions with respect to the
Corvas Intellectual Property Assets owned or exclusively licensed by Corvas.
Corvas (i) has not licensed or granted to anyone rights of any nature to use any
of the Corvas Intellectual Property Assets and (ii) is not obligated to and does
not pay royalties or other fees to anyone for Corvas' ownership, use, license or
transfer of any of the Corvas Intellectual Property Assets.
(g) Licenses Received. All material licenses or other material
agreements under which Corvas is granted rights by others in Corvas Intellectual
Property Assets are listed in Schedule 3.09(g) of the Corvas Disclosure
Schedule. For the purpose of the foregoing sentence, licenses and agreements for
commercial off-the-shelf computer software having a cost of less than $5,000 per
seat or license shall not be deemed material. Except as set forth in Schedule
3.09(g) of the Corvas Disclosure Schedule: (i) all licenses or other agreements
under which Corvas is granted rights by others in Corvas Intellectual Property
Assets are in full force and effect, (ii) to the knowledge of Corvas, there is
no material default under any such license or other agreement by any party
thereto, and (iii) all of the rights of Corvas under such licenses and other
agreements are assignable without the consent of the licensor except, with
respect to this clause (iii), as would not reasonably be expected to have a
Material Adverse Effect on Corvas. True and complete copies of all such licenses
or other agreements, and any amendments thereto, have been provided to Dendreon,
and to the knowledge of Corvas, the licensors under the
13
licenses and other agreements under which Corvas is granted rights have all
requisite power and authority to grant the rights purported to be conferred
thereby.
(h) Licenses Granted. All licenses or other agreements under which
Corvas has granted rights to others in Corvas Intellectual Property Assets are
listed in Schedule 3.09(h) of the Corvas Disclosure Schedule. Except as set
forth thereon, all such licenses or other agreements are in full force and
effect and, to the knowledge of Corvas, there is no material default thereunder
by any party thereto. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Dendreon.
(i) Sufficiency. The Corvas Intellectual Property Assets constitute all
of the Intellectual Property Assets used in designing, creating and developing
the Corvas Products and are all of the Intellectual Property Assets necessary
for the operation of Corvas' business as currently conducted.
(j) Infringement. None of the Corvas Products developed or under
development, manufactured or sold by Corvas, nor any process or know-how used by
Corvas in connection therewith, infringes, conflicts with or misappropriates any
Copyright or Trade Secret of any Person, or to Corvas' knowledge, infringes any
Patent, Xxxx, or other proprietary right of any Person.
(k) Corvas Nondisclosure Contracts. To the knowledge of Corvas, each of
the Corvas Nondisclosure Contracts is a valid and binding obligation of the
other party thereto enforceable in accordance with its terms, and, to Corvas'
knowledge, no such third party is in material breach of any such Corvas
Nondisclosure Contract. A complete list of all Corvas Nondisclosure Contracts is
provided in Section 3.09(k) of the Corvas Disclosure Schedule
3.10. Agreements, Contracts, and Commitments. Schedule 3.10 of the
Corvas Disclosure Schedule lists (i) all material contracts of Corvas (within
the meaning of Item 601(10) of Regulation S-K) that have not been filed as
exhibits to the Corvas SEC Reports; and (ii) all amendments to Corvas Material
Contracts, whether or not such contracts were filed as exhibits to the Corvas
SEC Reports, unless such amendments were also filed as exhibits to the Corvas
SEC Reports. The contracts listed on Schedule 3.10 of the Corvas Disclosure
Schedule together with the contracts filed as exhibits to the Corvas SEC Reports
are referred to collectively as the "Corvas Material Contracts". All Corvas
Material Contracts, as amended pursuant to amendments filed as exhibits to the
Corvas SEC Reports or listed on Schedule 3.10 of the Corvas Disclosure Schedule,
have either expired or remain in full force and effect, in each case in
accordance with their terms as stated in such documents. Corvas has not
breached, or received in writing any claim or threat that it has breached, any
of the terms and conditions of any Corvas Material Contracts in such a manner as
would permit any other party to cancel or terminate the same or would permit any
other party to seek material damages from Corvas under any Corvas Material
Contract and Corvas is not aware of the existence of a material breach of a
Corvas Material Contract by any other party thereto. Corvas is not engaged, and
has not agreed to engage, in any discussions related to the material amendment
of any Corvas Material contract.
3.11. Litigation. Except as described in the Corvas SEC Reports, there
are no claims, actions, suits, investigations or proceedings pending of which it
has notice or, to the knowledge
14
of Corvas, threatened against or affecting Corvas or any of its assets or
properties, at law or in equity, before or by any Federal, state, municipal or
other governmental agency or authority, foreign or domestic, or before any
arbitration board or panel, wherever located, which if determined adversely to
Corvas would, individually or in the aggregate, have a Material Adverse Effect
on Corvas.
3.12. Environmental Matters.
(a) Hazardous Substances. To the knowledge of Corvas, no Hazardous
Substances have ever been buried, spilled, leaked, discharged, emitted,
generated, stored, used or released, and no Hazardous Substances are now
present, in, on, or under any premises or other property that Corvas has at any
time owned, operated, occupied or leased, except for immaterial quantities
stored or used by Corvas in the ordinary course of its business and in
accordance with all applicable Environmental Laws. "Hazardous Substance" means
any pollutant, contaminant, flammable or explosive material, hazardous substance
or waste, solid waste, petroleum or any fraction thereof, petroleum products,
radioactive materials, asbestos, radon, lead, or any other chemical, substance
or material listed or identified in or regulated by any Environmental Law;
"Environmental Law" means the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., the Federal Water Pollution
Control Act, 33 U.S.C. Sections 1251 to 1387, the Clean Air Act, 42 U.S.C.
Section 7401 et seq., and any other federal, state, local or other governmental
statute, regulation, law or ordinance dealing with the protection of human
health, natural resources and/or the environment.
(b) Environmental Compliance. Except as set forth in Schedule 3.12(b)
of the Corvas Disclosure Schedule, (i) to the knowledge of Corvas, Corvas has
obtained all applicable permits, licenses and other authorizations required
under federal, state and local laws relating to pollution or protection of the
environment, and federal, state and local statutes, laws, ordinances, codes,
rules, regulations, orders and decrees relating to or imposing liability or
standards on conduct concerning any emissions, discharges, releases or
threatened releases of pollutants, contaminants, hazardous or toxic materials,
hazardous substances or wastes into ambient air, surface water, groundwater or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants
or hazardous or toxic materials or wastes; (ii) to the knowledge of Corvas,
Corvas is now and at all times has been in material compliance with all terms
and conditions of those required permits, licenses and authorizations and is
also in material compliance with all other conditions, standards, requirements
and obligations contained in all applicable Environmental Laws; (iii) Corvas is
not aware of, nor to the knowledge of Corvas, has Corvas received notice of, any
event, condition, circumstance, activity, practice, incident, action or plan
that may materially interfere with or prevent Corvas' continued compliance with
or that may give rise to any liability of Corvas under any Environmental Law, or
any release or threatened release of any Hazardous Substance, pollutant or
contaminant from or onto any property owned, operated or leased by Corvas.
(c) Hazardous Waste Activities. To the knowledge of Corvas, no property
that Corvas has ever owned, operated, occupied or leased has ever been used in
connection with the business of manufacturing, storing or transporting Hazardous
Wastes, and no RCRA Hazardous Wastes
15
have been treated, stored or disposed of there, except for immaterial quantities
stored or used by Corvas in the ordinary course of its business. "RCRA Hazardous
Wastes" means a hazardous waste as that term is defined in and pursuant to the
Resource Conservation and Recovery Act, 42 U.S.C. Section (S) 6901 et seq.
(d) UST's and AST's. To the knowledge of Corvas, there are not now and
never have been any underground or aboveground storage tanks or other
containment facilities of any kind on any premises or other property that Corvas
has ever owned, occupied, operated or leased which contain or ever did contain
any Hazardous Substances.
(e) Listing. To the knowledge of Corvas, no premises that Corvas has
ever owned, operated, occupied or leased has ever been listed on the National
Priorities List, the Comprehensive Environmental Response, Compensation and
Liability Information System or any similar federal, state or local list,
schedule, log, inventory or database.
(f) Environmental Reports. Corvas has made available to Dendreon for
inspection true and complete copies of all environmental site assessments,
reports, authorizations, permits, licenses, disclosures and other documents in
its possession, custody or control describing or relating in any way to Corvas,
or any property that Corvas has ever owned, operated, occupied or leased, which
suggest that any Hazardous Substances may be present in, on, or under any such
property in material quantities or that Corvas may have breached any
Environmental Law.
(g) Environmental Claims, etc. To the knowledge of Corvas, there are
not and there never have been any requests, notices, investigations, claims,
demands, regulatory orders, notices of violation, notices of penalties,
administrative proceedings, hearings, litigation or other legal proceedings
relating in any way to Corvas, or any property that Corvas has ever owned,
operated, occupied or leased, alleging liability under, violation of or
noncompliance with any Environmental Law or any license, permit or other
authorization issued pursuant thereto. To the knowledge of Corvas, no such
matter is threatened or impending, nor does there exist any substantial basis
therefor.
(h) Compliance with Environmental Laws. Corvas operates, and at all
times has operated, its business in accordance with all applicable Environmental
Laws, and all licenses, permits and other authorizations required pursuant to
any Environmental Law and necessary for the lawful operation of the business of
Corvas are in Corvas' possession and are in full force and effect. To Corvas'
knowledge, there is no threat that any such permit, license or other
authorization will be withdrawn, terminated, limited or materially changed.
3.13. Regulatory Compliance.
(a) All biological and drug products being manufactured, distributed or
developed by Corvas ("Corvas Pharmaceutical Products") that are subject to the
jurisdiction of the Food and Drug Administration ("FDA") are being manufactured,
labeled, stored, tested, distributed, and marketed in compliance with all
applicable requirements under the Food and Drug and Cosmetic Act ("FDCA"), the
Public Health Service Act, their applicable implementing regulations, and all
comparable state laws and regulations, except for noncompliances which,
16
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Corvas.
(b) All preclinical trials and clinical trials conducted by or on
behalf of Corvas have been, and are being conducted in material compliance with
the applicable requirements of Good Clinical Practice, Informed Consent, and all
applicable requirements relating to protection of human subjects contained in 21
CFR Parts 50, 54, and 56, except for noncompliances which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Corvas.
(c) All manufacturing operations conducted by or for the benefit of
Corvas have been and are being conducted in compliance with the FDA's applicable
current Good Clinical Practices regulations for drug and biological products,
except for noncompliances which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Corvas. In addition,
Corvas is in compliance with all applicable registration and listing
requirements set forth in 21 U.S.C. Section 360 and 21 CFR Part 207 and all
similar applicable laws and regulations, except for noncompliances which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Corvas.
(d) Neither Corvas nor any Representative of Corvas, nor to the
knowledge of Corvas, any of its licensees or assignees of Corvas Intellectual
Property has received any notice that the FDA or any other governmental entity
has initiated, or threatened to initiate, any action to suspend any clinical
trial, withdraw approval of any Investigational New Drug sponsored by Corvas or
otherwise restrict the preclinical research on or clinical study of any Corvas
Pharmaceutical Product or any biological or drug product being developed by any
licensee or assignee of Corvas Intellectual Property based on such intellectual
property, or to recall, suspend or otherwise restrict the manufacture of any
Corvas Pharmaceutical Product.
(e) Neither Corvas nor, to the knowledge of Corvas, any of its
officers, key employees, agents or clinical investigators acting for Corvas, has
committed any act, made any statement or failed to make any statement that would
reasonably be expected to provide a basis for the FDA to invoke its policy with
respect to "Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities" set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any
amendments thereto. Additionally, neither Corvas, nor to the knowledge of
Corvas, any officer, key employee or agent of Corvas has been convicted of any
crime or engaged in any conduct that would reasonably be expected to result in
(i) debarment under 21 U.S.C. Section 3351 or any similar state law or (ii)
exclusion under 42 U.S.C. Section 1320a-7 or any similar state law or
regulation.
(f) All animal studies, preclinical tests and human clinical trials
performed in connection with or as the basis for any regulatory approval
required for the Corvas Pharmaceutical Products have been conducted in
accordance with experimental protocols, informed consents, procedures and
controls generally used by qualified experts in the animal, preclinical or
clinical study of products comparable to those being developed by Corvas.
(g) Corvas has provided Dendreon with copies of any and all notices of
inspectional observations, establishment inspection reports and any other
documents received from
17
governmental entities, that indicate or suggest lack of compliance with the
regulatory requirements of such governmental entities. Corvas has made available
to Dendreon for review all correspondence to or from all governmental entities,
minutes of meetings, written reports of phone conversations, visits or other
contact with governmental entities, notices of inspectional observations,
establishment inspection reports, and all other documents concerning
communications to or from governmental entities, or prepared by or which bear in
any way on Corvas' compliance with regulatory requirements of governmental
entities, or on the likelihood of timing of approval of any Corvas
Pharmaceutical Products.
(h) There are no proceedings pending with respect to a violation by
Corvas of the FDCA, FDA regulations adopted thereunder, the Controlled Substance
Act or any other legislation or regulation promulgated by any other United
States governmental entity that reasonably might be expected to have a Material
Adverse Effect on Corvas or to result in criminal liability.
3.14. Employee Benefit Plans.
(a) There are no "employee pension benefit plans," as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or "multiemployer plans" as defined in Section 3(37) of ERISA,
maintained or contributed to by Corvas or any trade or business (whether or not
incorporated) (an "ERISA Affiliate") which is aggregated with Corvas pursuant to
Section 414 of the Code for the benefit of its current or former employees.
Corvas has set forth on Schedule 3.14 of the Corvas Disclosure Schedule all
"employee benefit plans", as defined in Section 3(3) of ERISA, and all bonus,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, welfare, severance, fringe benefit (including, but not limited to,
benefits relating to Company automobiles, clubs, vacation, child care,
parenting, sabbatical, sick leave, medical, dental, hospitalization, life
insurance and other types of insurance), and other similar employee benefit
plans, arrangements, and employment and consulting agreements, whether or not
such plans, arrangements, or agreements are "employee benefit plans", written or
otherwise, for the benefit of or relating to, any current or former employee of
Corvas or any ERISA Affiliate (together the "Corvas Employee Plans").
(b) With respect to each Corvas Employee Plan, Corvas has made
available to Dendreon a true and correct copy of (i) the annual report (Form
5500) for the most recent plan year that is filed with the Internal Revenue
Service ("IRS") or U. S. Department of Labor, if applicable, (ii) the current
plan document and summary plan description, and all amendments thereto, for each
such Corvas Employee Plan, (iii) each trust agreement and group annuity
contract, if any, relating to such Corvas Employee Plan, (iv) the most recent
actuarial report or valuation relating to an Corvas Employee Plan subject to
Title IV of ERISA, and (v) the most recent IRS determination letter, where
applicable.
(c) With respect to the Corvas Employee Plans, individually and in the
aggregate, Corvas and its ERISA Affiliates are in full compliance with the
applicable provisions of ERISA, the regulations and published authorities
thereunder, and all other laws applicable with respect to all such Corvas
Employee Plans, and no event has occurred, and to the knowledge of Corvas, there
exists no condition or set of circumstances in connection with which Corvas
could be subject to any liability that is reasonably likely to have a Material
Adverse Effect on Corvas, under
18
ERISA, the Code, or any other applicable law. Corvas has classified all
individuals who perform services for Corvas correctly under each Corvas Employee
Plan, ERISA and the Code as common law employees, independent contractors or
leased employees. Except to the extent required under Section 4980B of the Code,
neither Corvas nor any ERISA Affiliate provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employees.
(d) With respect to the Corvas Employee Plans, individually and in the
aggregate, there are no benefit obligations required to be funded for which
contributions have not been made or properly accrued, and there are no unfunded
benefit obligations which have not been accounted for by reserves, or otherwise
properly footnoted in accordance with generally accepted accounting principles
on the financial statements of Corvas. Except as disclosed in Corvas SEC Reports
filed prior to the date of this Agreement and except as provided for in this
Agreement, neither Corvas nor any ERISA Affiliate is a party to any oral or
written (i) union or collective bargaining agreement, (ii) agreement with any
officer or other key employee of Corvas, the benefits of which are contingent,
or the terms of which are materially altered upon the occurrence of a
transaction involving Corvas of the nature contemplated by this Agreement, (iii)
agreement with any officer of Corvas providing any term of employment or
compensation guarantee extending for a period longer than one year from the date
hereof or for the payment of compensation in excess of $100,000 per annum, or
(iv) agreement or plan, including any stock option plan, stock appreciation
right plan, restricted stock plan, or stock purchase plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.
3.15. Compliance with Laws. Corvas has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state, or local statute, law, or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which would not have a Material Adverse Effect
on Corvas.
3.16. Interested Party Transactions. Except as disclosed in the Corvas
SEC Reports, since the date of Corvas' last proxy statement to its stockholders,
no event has occurred that would be required to be reported by Corvas as a
Certain Relationship or Related Transaction pursuant to Item 404 of Regulation
S-K promulgated by the SEC.
3.17. No Existing Discussions. Corvas is not engaged, directly or
indirectly, in any discussions or negotiations with any other party with respect
to a Corvas Acquisition Proposal.
3.18. No Secured Debt. Except as disclosed in the Corvas SEC reports,
there is not now any secured debt (including capitalized leases) of Corvas. The
existence of any outstanding secured debt (including capitalized leases) of
Corvas does not violate the terms of any material note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument or other agreement or commitment to which Corvas is a party
or by which Corvas or any of its assets or properties is bound or encumbered.
19
3.19. Opinion of Financial Advisor. The financial advisor of Corvas,
Lazard Freres & Co., LLC, has delivered to the Board of Directors of Corvas an
oral opinion (which will be confirmed in writing) dated the date of this
Agreement to the effect that the Conversion Number is fair from a financial
point of view to the stockholders of Corvas.
3.20. Corvas' Tax Representation Relating to Reorganization.
(a) After January 3, 2003 and through the Effective Date of the Merger,
neither Corvas nor any person related to Corvas (as defined in Treasury
Regulation Section 1.368-1(e)(3)) has directly or through any transaction,
agreement, or arrangement with any other person (i) acquired stock of Corvas, or
(ii) redeemed or made distributions with respect to Corvas stock.
(b) Corvas operates at least one significant historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Treasury Regulation Section 1.1368-1(d).
3.21. Insurance. Each policy of insurance maintained by or for the
benefit of Corvas (collectively, the "Corvas Policies") is listed in Schedule
3.21 of the Corvas Disclosure Schedule. Except as noted in Schedule 3.21 of the
Corvas Disclosure Schedule: (i) Corvas is the sole beneficiary of each of the
Corvas Policies; (ii) each of the Corvas Policies is in full force and effect,
and Corvas has received no notice of intent to cancel any of the Corvas Policies
and is not otherwise aware of the intent of any carrier to cancel any of the
Corvas Policies or of any basis for any such cancellation; (iii) the carrier or
carriers under each of the Corvas Policies are reputable, and Corvas has no
information leading it to believe that any such carrier is experiencing or is
likely to experience liquidity problems; and (iv) the Corvas Policies, in the
aggregate are sufficient in kind and coverage limits to provide risk protection
comparable to that provided to prudent companies engaged in activities similar
to those engaged in by Corvas under similar policies customarily maintained by
such companies.
3.22. Employment Matters. Corvas has complied with, is not in violation
of, and has not received any notices of violation with respect to all applicable
laws, rules and regulations relating to employment, including the Immigration
Reform and Control Act, as amended, those related to wages, hours (including
payment of overtime required by state or federal law), equal employment
opportunity and the payment of state and federal payroll taxes, including Social
Security taxes. There are no claims, actions, suits, investigations or
proceedings pending of which it has notice or, to the knowledge of Corvas,
threatened against or affecting Corvas alleging any violation of any of the
foregoing laws, rules or regulations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DENDREON, SUB AND LLC
Dendreon, Sub and LLC jointly and severally represent and warrant to
Corvas that the statements contained in this Article IV are true and correct as
of the date hereof, except as set forth in the Disclosure Schedule delivered by
Dendreon to Corvas on or before the date of this Agreement (the "Dendreon
Disclosure Schedule"). The Dendreon Disclosure Schedule shall
20
be arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article IV and the disclosure in any paragraph, including
appropriate cross references, shall qualify only the corresponding paragraph in
this Article IV.
4.01. Organization of Dendreon, Sub and LLC. Each of Dendreon and Sub
is a corporation and LLC is a limited liability company; each has been duly
organized, and is validly existing and in good standing under the Delaware Law,
has all requisite corporate power to own, lease, and operate its property and to
carry on its business as now being conducted, and is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the failure to be so qualified would have a Material Adverse Effect on
Dendreon. Other than its ownership of Sub and LLC, Dendreon does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture, or other business association or entity, excluding securities in any
publicly traded company held for investment by Dendreon and comprising less than
one percent of the outstanding equity of such company.
4.02. Dendreon Capital Structure.
(a) The authorized capital stock of Dendreon consists of 80,000,000
shares of Common Stock, $0.001 par value ("Dendreon Common Stock"), and
10,000,000 shares of Preferred Stock, $0.001 par value ("Dendreon Preferred
Stock"). On February 21, 2003, (i) 26,807,979 shares of Dendreon Common Stock
were outstanding, all of which were validly issued, fully paid, and
nonassessable, (ii) no shares of Dendreon Common Stock were held in the treasury
of Dendreon, (iii) 604,287 shares of Dendreon Common Stock were reserved for
future issuance pursuant to stock options granted and outstanding or available
for grant under employee stock incentive and stock purchase plans described in
the Dendreon SEC Reports (defined in Section 4.04) (the "Dendreon Option
Plans"), (iv) an aggregate of 568,337 shares of Dendreon Common Stock were
reserved for future issuance pursuant to warrants granted and outstanding as of
February 21, 2003 (the "Dendreon Warrants"), (v) up to 4,800,000 shares of
Dendreon Common Stock were reserved for future issuance pursuant to the Private
Equity Line Financing Agreement dates as of June 11, 2002 between Dendreon and
BNY Capital markets, Inc., (vi) shares issuable to Genentech, Inc. relating to
its commitment to purchase Dendreon Common Stock upon the occurrence of a
milestone as specified in the Collaborative Development and Marketing Agreement
between Dendreon and Genentech, Inc. and (vii) 1,000,000 shares of Dendreon
Preferred Stock were reserved for future issuance upon exercise of Rights
granted under the Rights Agreement, dated as of September 18, 2002, between
Dendreon and Mellon Investor Services, LLC (the "Dendreon Rights Agreement").
The Dendreon Rights Agreement has not been amended. Since February 21, 2003, no
shares of Dendreon Common Stock have been issued except pursuant to the exercise
of options granted under the Dendreon Option Plans, nor has Dendreon become
obligated to issue any additional shares of Dendreon Common Stock other than
pursuant to additional grants of options under the Dendreon Option Plans, each
of which grants has been made in the ordinary course of Dendreon's business and
in accordance with existing policies. None of the shares of Dendreon Preferred
Stock are issued and outstanding and Dendreon is not obligated to issue any such
shares except upon exercise of Rights granted under the Dendreon Rights
Agreement. There are no obligations, contingent or otherwise, of Dendreon to
repurchase, redeem, or otherwise acquire any shares of Dendreon
21
Common Stock or to provide funds to or make any investment (in the form of a
loan, capital contribution, or otherwise) in any other entity.
(b) Except as set forth in this Section 4.02, there are no (i) equity
securities of any class of Dendreon, or any security exchangeable into or
exercisable for such equity securities issued, reserved for issuance, or
outstanding, or (ii) options, warrants, equity securities, calls, rights,
commitments, or agreements of any character to which Dendreon is a party or by
which it is bound obligating Dendreon to issue, deliver, or sell, or cause to be
issued, delivered, or sold, additional shares of capital stock of Dendreon or
obligating Dendreon, to grant, extend, accelerate the vesting of, or enter into
any such option, warrant, equity security, call, right, commitment, or agreement
((i) and (ii), collectively, "Dendreon Stock Rights"). Dendreon is not a party
to, nor is Dendreon aware of, any voting agreement, voting trust, proxy, or
other agreements or understandings with respect to the shares of capital stock
of Dendreon. Except as otherwise provided in that certain Fourth Amended and
Restated Stockholders' Agreement dated as of September 3, 1999, the Registration
Rights Agreement dated as of October 14, 1999 between Dendreon and Fresenius AG,
the Registration Rights Agreement dated as of August 19, 2002 between Dendreon
and Shoreline Pacific LLC, and the Equity Investment Agreement dated July 31,
2002 between Dendreon and Genentech, Inc., Dendreon is not a party to any
agreement, arrangement, or understanding providing for registration rights with
respect to any shares of capital stock of Dendreon.
4.03. Authority, No Conflict, Required Filings and Consents.
(a) Each of Dendreon, Sub and LLC has all requisite corporate power and
authority to enter into this Agreement and (subject to obtaining the Required
Dendreon Stockholder Vote as required in Section 4.03(d)) to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by Dendreon and the consummation of the transactions by Dendreon
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Dendreon, Sub and LLC, subject only to the
approval of the Merger by Dendreon's stockholders under Marketplace Rule 4350,
as described in Section 4.03(d). This Agreement has been duly executed and
delivered by Dendreon, Sub and LLC and constitutes the valid and binding
obligation of Dendreon, Sub and LLC, enforceable against each of them in
accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting the rights of
creditors generally and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
(b) The execution and delivery of this Agreement by Dendreon, Sub and
LLC does not, and, subject to obtaining the Required Dendreon Stockholder Vote,
the consummation of the transactions contemplated by this Agreement by Dendreon,
Sub and LLC will not, (i) conflict with, or result in any violation or breach of
any provision of the Certificate of Incorporation or Bylaws of Dendreon or Sub
or the Certificate of Formation or Operating Agreement of LLC, (ii) result in
any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to right of termination, cancellation, or
acceleration of any obligation or loss of any benefit) under any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, or lease or
any material contract, or other material agreement, instrument, or obligation to
which Dendreon is a party or by which Dendreon or any of its
22
properties or assets may be bound, or (iii) conflict with or violate any permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule, or regulation applicable to Dendreon or any of its properties
or assets, except in the case of each of (ii) and (iii) for any breach,
violation or conflict which would not have a Material Adverse Effect on
Dendreon.
(c) No consent, approval, order, or authorization of, or registration,
declaration, or filing with, any Governmental Entity, is required by or with
respect to Dendreon in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) the filing of a Registration Statement on Form S-4 with the Securities
and Exchange Commission ("SEC") in accordance with the Securities Act of 1933,
as amended (the "Securities Act"), (ii) the filing of the Certificate of Merger
and the LLC Certificate of Merger with the Secretary of State of the State of
Delaware, and (iii) the filing of the Joint Proxy Statement (as defined in
Section 6.02(a) below) with the SEC in accordance with the Exchange Act.
(d) The affirmative vote of the holders of a majority of the shares of
Dendreon Common Stock present or represented by proxy at the Dendreon
Stockholders' Meeting (as defined in Section 6.06) is the only vote of
Dendreon's stockholders required to approve the Share Issuance (the "Required
Dendreon Stockholder Vote"), and is the only vote of holders of any class or
series of Dendreon's capital stock necessary for Dendreon to effect the Merger
and the LLC Merger and consummate the transactions contemplated in this
Agreement.
4.04. SEC Filings; Financial Statements.
(a) Dendreon has filed all forms, reports, and documents required to be
filed by Dendreon with the SEC since January 1, 1999 (including all exhibits,
notes, and schedules thereto and documents incorporated by reference therein)
(collectively, the "Dendreon SEC Reports"). The Dendreon SEC Reports (i) at the
time filed, with respect to all of the Dendreon SEC Reports other than
registration statements filed under the Securities Act, or at the time of their
respective effective dates, with respect to registration statements filed under
the Securities Act, complied as to form in all material respects with the
applicable requirements of the Securities Act or the Exchange Act, as the case
may be, and (ii) did not at the time filed or at the time of their respective
effective dates, as the case may be (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing), contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in such Dendreon SEC Reports or necessary in order to make
the statements in such Dendreon SEC Reports, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the financial statements (including, in each case, any
related notes) contained in the Dendreon SEC Reports at the time filed or at the
time of their respective effective dates, as the case may be, complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly presented the financial position of Dendreon at
the respective dates and the results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal
23
and recurring year-end adjustments. The balance sheet of Dendreon as of
September 30, 2002 included in Dendreon's Quarterly Report on Form 10-Q filed
with the SEC with respect to the quarter then ended is referred to herein as the
"Dendreon Balance Sheet."
(c) Dendreon has in place the "disclosure controls and procedures" (as
defined in Rules 13a-14(c) and 15d-14(c) of the Exchange Act) required in order
for the Chief Executive Officer and Chief Financial Officer of Dendreon to
engage in the review and evaluation process mandated by the Exchange Act.
Dendreon's "disclosure controls and procedures" are reasonably designed to
ensure that all information (both financial and non-financial) required to be
disclosed by Dendreon in the reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC, and that all such information is
accumulated and communicated to Dendreon's management as appropriate to allow
timely decisions regarding required disclosure and to make the certifications of
the Chief Executive Officer and Chief Financial Officer of Dendreon required
under the Exchange Act with respect to such reports.
4.05. No Undisclosed Liabilities. Except as disclosed in the Dendreon
SEC Reports, Dendreon does not have any liabilities, either accrued or
contingent (whether or not required to be reflected in financial statements in
accordance with generally accepted accounting principles), and whether due or to
become due, which individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on Dendreon, other than (i) liabilities
reflected in the Dendreon Balance Sheet, (ii) obligations to perform under
contracts either disclosed in the Dendreon SEC Reports or in the Dendreon
Disclosure Schedule, and (iii) normal or recurring liabilities incurred since
the date of the Dendreon Balance Sheet, in the ordinary course of business
consistent with past practices.
4.06. Absence of Certain Changes or Events. Since the date of the
Dendreon Balance Sheet, Dendreon has conducted its business only in the ordinary
course and in a manner consistent with past practice and, since such date, there
has not been (i) any Material Adverse Effect on Dendreon, (ii) any damage,
destruction, or loss (whether or not covered by insurance) with respect to any
property of Dendreon having a Material Adverse Effect on Dendreon, (iii) any
material change by Dendreon in its accounting methods, principles, or practices
to which Dendreon has not previously consented in writing, (iv) any revaluation
by Dendreon or any of its assets having a Material Adverse Effect on Dendreon,
or (v) any other action or event that would have required the consent of Corvas
pursuant to Section 5.01 of this Agreement had such action or event occurred
after the date of this Agreement.
4.07. Taxes.
(a) All Tax Returns, of or relating to any Taxes heretofore required to
be filed by Dendreon have been duly filed on a timely basis. All such Tax
Returns were complete and accurate in all material respects. Dendreon has paid
or has made adequate provision for the payment of all Taxes.
(b) As of the date of this Agreement there are no audits or
administrative proceedings, court proceedings or claims pending against Dendreon
with respect to any Taxes, no assessment, deficiency or adjustment has been
asserted or, to the knowledge of Dendreon,
24
proposed with respect to any Tax Return of or with respect to Dendreon and there
are no liens for Taxes upon the assets or properties of Dendreon, except liens
for Taxes not yet delinquent.
(c) There are not in force any waivers of agreements, arrangements, or
understandings by or with respect to Dendreon of or for an extension of time for
the assessment or payment of any Taxes. Dendreon has not received a written
ruling of a taxing authority relating to Taxes or entered into a written and
legally binding agreement with a taxing authority relating to Taxes that would
have a continuing effect after the Closing Date. Dendreon is not required to
include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by Dendreon, and to
the knowledge of Dendreon the IRS has not proposed any such adjustment or change
in accounting method.
(d) To the knowledge of Dendreon, Dendreon has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, creditor, independent contractor or other third party.
(e) Dendreon has not filed a consent under Section 341(f) of the Code.
Dendreon is not a party to any Tax allocation or Tax sharing arrangements.
4.08. Tangible Properties.
(a) Real Property. Dendreon has provided or made available to Corvas a
true and complete list of all real property owned by Dendreon and Leases of
Dendreon as of the date hereof, and the name of the lessor, the date of the
Lease and each amendment to the Lease, and the aggregate annual rental or other
fees payable under any such Lease. All such Leases are valid and binding
obligations of Dendreon and, to Dendreon's knowledge, of each other party
thereto, in accordance with their respective terms, as those terms are reflected
in documents provided to Corvas, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws affecting the
rights of creditors generally and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies, and Dendreon is not
in material default under any such Lease.
(b) Tangible Personal Property. All material items of tangible personal
property of Dendreon are in good operating condition and repair (ordinary wear
and tear excepted), are performing satisfactorily, and are available for use in
the conduct of Dendreon's business. Dendreon has and will have good and
marketable title to all material personal property owned by it, free and clear
of all security interests, mortgages, liens, pledges, charges, valid claims or
encumbrances of any kind or character other than liens (i) under security
agreements disclosed to Corvas; (ii) for taxes not yet due and payable; or (iii)
incurred in the ordinary course of Dendreon's business that do not, individually
or in the aggregate, have a Material Adverse Effect on Dendreon.
4.09. Intellectual Property.
(a) Ownership of Intellectual Property Assets. Dendreon owns or has
valid rights or licenses to use all of the Dendreon Intellectual Property
Assets. All Dendreon Intellectual Property Assets are free and clear of all
mortgages, pledges, charges, liens, equities, security interests or other
encumbrances, and Dendreon has the right to use without payment to a third
25
party all of such Dendreon Intellectual Property Assets. No claim is pending
against Dendreon or, to Dendreon's knowledge, threatened against Dendreon or its
officers, employees or consultants to the effect that Dendreon's right, title
and interest in and to any of the Dendreon Intellectual Property Assets is
invalid or unenforceable by Dendreon. Dendreon is not aware of any material
information that would adversely affect the validity or enforceability of any of
the Patents, Marks, Trade Secrets or Copyrights which constitute Dendreon
Intellectual Property Assets. All former and current employees, consultants and
contractors of Dendreon who were involved in, or who contributed to, the
creation or development of any of the Dendreon Intellectual Property Assets have
executed written instruments with Dendreon that assign to Dendreon all of such
Person's rights to any inventions, improvements, discoveries, writings or
information relating to the business of Dendreon constituting Dendreon
Intellectual Property Assets. To the knowledge of Dendreon, no employee of
Dendreon has entered into any agreement that restricts or limits in any way the
scope or type of work in which the employee may be engaged or requires the
employee to transfer, assign or disclose information concerning his work to
anyone other than Dendreon. A complete list of Dendreon Products is provided in
Schedule 4.09(a) of the Dendreon Disclosure Schedule.
(b) Patents. Schedule 4.09(b) of the Dendreon Disclosure Schedule sets
forth a complete and accurate list of all Patents constituting Dendreon
Intellectual Property Assets. All of such issued Patents are currently in
compliance with formal governmental legal requirements (including, without
limitation, payment of filing, examination and maintenance fees and proofs of
working or use.) All of such Patents are valid and enforceable. In each case
where such an issued Patent is held by Dendreon by assignment, the assignment
has been duly recorded with the U.S. Patent and Trademark Office and all other
jurisdictions of registration. No such issued Patent or patent application has
been or is now involved in any interference, reissue, reexamination or
opposition proceeding. To Dendreon's knowledge, there is no potentially
interfering patent or patent application of any third party that has had or
would reasonably be expected to have a Material Adverse Effect on Dendreon. All
Dendreon Products made, used or sold under the Patents have been marked with the
proper patent notice.
(c) Trademarks. Schedule 4.09(c) of the Dendreon Disclosure Schedule
sets forth a complete and accurate list of all Marks constituting Dendreon
Intellectual Property Assets. All such Marks that have been registered with the
U. S. Patent and Trademark Office or any other jurisdiction are currently in
compliance with formal governmental legal requirements (including, without
limitation, the timely post-registration filing of affidavits of use and
incontestability and renewal applications), are, to Dendreon's knowledge, valid
and enforceable in the jurisdictions in which they are registered. In each case
where such a Xxxx is held by Dendreon by assignment, the assignment has been
duly recorded with the U.S. Patent and Trademark Office and all other
jurisdictions of registration. No such Xxxx has been or is now involved in any
opposition, invalidation or cancellation proceeding and, to Dendreon's
knowledge, no such action is threatened against Dendreon with respect to any of
such Marks. All Dendreon Products and materials containing a Xxxx xxxx the
proper notice where required by law.
(d) Copyrights. Dendreon does not have any Copyrights registered with
the U. S. Copyright Office.
26
(e) Trade Secrets. Dendreon has taken all reasonable security measures
(including, without limitation, entering into appropriate confidentiality and
nondisclosure agreements with all officers, directors, employees and consultants
of Dendreon and any other Persons with access to the Trade Secrets constituting
Dendreon Intellectual Property Assets) to protect the secrecy, confidentiality
and value of the Trade Secrets constituting Dendreon Intellectual Property
Assets. To the knowledge of Dendreon, there has not been any breach by any party
to any such confidentiality or non-disclosure agreement. The Trade Secrets
constituting Dendreon Intellectual Property Assets have not been disclosed by
Dendreon to any Person other than employees or contractors of Dendreon who had a
need to know and use such Trade Secrets in the course of their employment or
contract performance, or to other persons under confidentiality and
non-disclosure agreements. To the knowledge of Dendreon, Dendreon has the right
to use, free and clear of claims of third parties, all Trade Secrets
constituting Dendreon Intellectual Property Assets. To the knowledge of
Dendreon, no third party has asserted that the use by Dendreon of any Trade
Secret constituting Dendreon Intellectual Property Assets violates the rights of
such third party.
(f) Exclusivity of Rights. Dendreon has the exclusive right to use,
license, distribute, transfer and bring infringement actions with respect to the
Dendreon Intellectual Property Assets owned or exclusively licensed by Dendreon.
Dendreon (i) has not licensed or granted to anyone rights of any nature to use
any of the Dendreon Intellectual Property Assets and (ii) is not obligated to
and does not pay royalties or other fees to anyone for Dendreon's ownership,
use, license or transfer of any of the Dendreon Intellectual Property Assets.
(g) Licenses Received. All material licenses or other material
agreements under which Dendreon is granted rights by others in Dendreon
Intellectual Property Assets are listed in Schedule 4.09(g) of the Dendreon
Disclosure Schedule. For the purpose of the foregoing sentence, licenses and
agreements for commercial off-the-shelf computer software having a cost of less
than $5,000 per seat or license shall not be deemed material. Except as set
forth in Schedule 4.09(g) of the Dendreon Disclosure Schedule: (i) all licenses
or other agreements under which Dendreon is granted rights by others in Dendreon
Intellectual Property Assets are in full force and effect, (ii) to the knowledge
of Dendreon, there is no material default under any such license or other
agreement by any party thereto, and (iii) all of the rights of Dendreon under
such licenses and other agreements are assignable without the consent of the
licensor except, with respect to this clause (iii), as would not reasonably be
expected to have a Material Adverse Effect on Dendreon. True and complete copies
of all such licenses or other agreements, and any amendments thereto, have been
made available or provided to Corvas, and to the knowledge of Dendreon, the
licensors under the licenses and other agreements under which Dendreon is
granted rights have all requisite power and authority to grant the rights
purported to be conferred thereby.
(h) Licenses Granted. All licenses or other agreements under which
Dendreon has granted rights to others in Dendreon Intellectual Property Assets
are listed in Schedule 4.09(h) of the Dendreon Disclosure Schedule. Except as
set forth thereon, all such licenses or other agreements are in full force and
effect, and to the knowledge of Dendreon, there is no material default
thereunder by any party thereto. True and complete copies of all such licenses
or other agreements, and any amendments thereto, have been provided to Corvas.
27
(i) Sufficiency. The Dendreon Intellectual Property Assets constitute
all of the Intellectual Property Assets used in designing, creating and
developing the Dendreon Products and are all of the Intellectual Property Assets
necessary for the operation of Dendreon's business as currently conducted.
(j) Infringement. None of the Dendreon Products developed or under
development, manufactured or sold by Dendreon, nor any process or know-how used
by Dendreon in connection therewith, infringes, conflicts with or
misappropriates any Copyright or Trade Secret of any Person, or to Dendreon's
knowledge, infringes any Patent, Xxxx, or other proprietary right of any Person.
(k) Dendreon Nondisclosure Contracts. To the knowledge of Dendreon,
each of the Dendreon Nondisclosure Contracts is a valid and binding obligation
of the other party thereto enforceable in accordance with its terms, and, to
Dendreon's knowledge, no such third party is in material breach of any such
Dendreon Nondisclosure Contract. A complete list of all Dendreon Nondisclosure
Contracts is provided in Schedule 4.09(k) of the Dendreon Disclosure Schedule.
4.10. Agreements, Contracts, and Commitments. Schedule 4.10 of the
Dendreon Disclosure Schedule lists (i) all material contracts of Dendreon
(within the meaning of Item 601(10) of Regulation S-K) that have not been filed
as exhibits to the Dendreon SEC Reports; and (ii) all amendments to Dendreon
Material Contracts, whether or not such contracts were filed as exhibits to the
Dendreon SEC Reports, unless such amendments were also filed as exhibits to the
Dendreon SEC Reports. The contracts listed on Schedule 4.10 of the Dendreon
Disclosure Schedule together with the contracts filed as exhibits to the
Dendreon SEC Reports are referred to collectively as the "Dendreon Material
Contracts". All Dendreon Material Contracts, as amended pursuant to amendments
filed as exhibits to the Dendreon SEC Reports or listed on Schedule 4.10 of the
Dendreon Disclosure Schedule, have either expired or remain in full force and
effect, in each case in accordance with their terms as stated in such documents.
Dendreon has not breached, or received in writing any claim or threat that it
has breached, any of the terms and conditions of any Dendreon Material Contracts
in such a manner as would permit any other party to cancel or terminate the same
or would permit any other party to seek material damages from Dendreon under any
Dendreon Material Contract and Dendreon is not aware of the existence of a
material breach of a Dendreon Material Contract by any other party thereto.
Dendreon is not engaged, and has not agreed to engage, in any discussions
related to the material amendment of any Dendreon Material Contract.
4.11. Litigation. Except as described in the Dendreon SEC Reports,
there are no claims, actions, suits, investigations or proceedings pending of
which it has notice or, to the knowledge of Dendreon, threatened against or
affecting Dendreon or any of its assets or properties, at law or in equity,
before or by any Federal, state, municipal or other governmental agency or
authority, foreign or domestic, or before any arbitration board or panel,
wherever located, which if determined adversely to Dendreon would, individually
or in the aggregate, have a Material Adverse Effect on Dendreon.
4.12. Environmental Matters.
28
(a) Hazardous Substances. To the knowledge of Dendreon, no Hazardous
Substances have ever been buried, spilled, leaked, discharged, emitted,
generated, stored, used or released, and no Hazardous Substances are now
present, in, on, or under any premises or other property that Dendreon has at
any time owned, operated, occupied or leased, except for immaterial quantities
stored or used by Dendreon in the ordinary course of its business and in
accordance with all applicable Environmental Laws.
(b) Environmental Compliance. Except as set forth in Schedule 4.12(b)
of the Dendreon Disclosure Schedule, (i) to the knowledge of Dendreon, Dendreon
has obtained all applicable permits, licenses and other authorizations required
under federal, state and local laws relating to pollution or protection of the
environment, and federal, state and local statutes, laws, ordinances, codes,
rules, regulations, orders and decrees relating to or imposing liability or
standards on conduct concerning any emissions, discharges, releases or
threatened releases of pollutants, contaminants, hazardous or toxic materials,
hazardous substances or wastes into ambient air, surface water, groundwater or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants
or hazardous or toxic materials or wastes; (ii) to the knowledge of Dendreon,
Dendreon is now and at all times has been in material compliance with all terms
and conditions of those required permits, licenses and authorizations and is
also in material compliance with all other conditions, standards, requirements
and obligations contained in all applicable Environmental Laws; (iii) Dendreon
is not aware of, nor to the knowledge of Dendreon, has Dendreon received notice
of, any event, condition, circumstance, activity, practice, incident, action or
plan that may materially interfere with or prevent Dendreon's continued
compliance with or that may give rise to any liability of Dendreon under any
Environmental Law, or any release or threatened release of any Hazardous
Substance, pollutant or contaminant from or onto any property owned, operated or
leased by Dendreon.
(c) Hazardous Waste Activities. To the knowledge of Dendreon, no
property that Dendreon has ever owned, operated, occupied or leased has ever
been used in connection with the business of manufacturing, storing or
transporting Hazardous Wastes, and no RCRA Hazardous Wastes have been treated,
stored or disposed of there, except for immaterial quantities stored or used by
Dendreon in the ordinary course of its business.
(d) UST's and AST's. To the knowledge of Dendreon, there are not now
and never have been any underground or aboveground storage tanks or other
containment facilities of any kind on any premises or other property that
Dendreon has ever owned, occupied, operated or leased which contain or ever did
contain any Hazardous Substances.
(e) Listing. To the knowledge of Dendreon, no premises that Dendreon
has ever owned, operated, occupied or leased has ever been listed on the
National Priorities List, the Comprehensive Environmental Response, Compensation
and Liability Information System or any similar federal, state or local list,
schedule, log, inventory or database.
(f) Environmental Reports. Dendreon has made available to Dendreon for
inspection true and complete copies of all environmental site assessments,
reports, authorizations, permits, licenses, disclosures and other documents in
its possession, custody or control describing or relating in any way to
Dendreon, or any property that Dendreon has ever owned, operated,
29
occupied or leased, which suggest that any Hazardous Substances may be present
in, on, or under any such property in material quantities or that Dendreon may
have breached any Environmental Law.
(g) Environmental Claims, etc. To the knowledge of Dendreon, there are
not and there never have been any requests, notices, investigations, claims,
demands, regulatory orders, notices of violation, notices of penalties,
administrative proceedings, hearings, litigation or other legal proceedings
relating in any way to Dendreon, or any property that Dendreon has ever owned,
operated, occupied or leased, alleging liability under, violation of or
noncompliance with any Environmental Law or any license, permit or other
authorization issued pursuant thereto. To the knowledge of Dendreon, no such
matter is threatened or impending, nor does there exist any substantial basis
therefor.
(h) Compliance with Environmental Laws. Dendreon operates, and at all
times has operated, its business in accordance with all applicable Environmental
Laws, and all licenses, permits and other authorizations required pursuant to
any Environmental Law and necessary for the lawful operation of the business of
Dendreon are in Dendreon's possession and are in full force and effect. To
Dendreon's knowledge, there is no threat that any such permit, license or other
authorization will be withdrawn, terminated, limited or materially changed.
4.13. Regulatory Compliance.
(a) All biological and drug products being manufactured, distributed or
developed by Dendreon ("Dendreon Pharmaceutical Products") that are subject to
the jurisdiction of the Food and Drug Administration ("FDA") are being
manufactured, labeled, stored, tested, distributed, and marketed in compliance
with all applicable requirements under the FDCA, the Public Health Service Act,
their applicable implementing regulations, and all comparable state laws and
regulations, except for noncompliances which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on Dendreon.
(b) All preclinical trials and clinical trials conducted by or on
behalf of Dendreon have been, and are being conducted in material compliance
with the applicable requirements of Good Clinical Practice, Informed Consent,
and all applicable requirements relating to protection of human subjects
contained in 21 CFR Parts 50, 54, and 56, except for noncompliances which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Dendreon.
(c) All manufacturing operations conducted by or for the benefit of
Dendreon have been and are being conducted in compliance with the FDA's
applicable current Good Clinical Practices regulations for drug and biological
products, except for noncompliances which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on Dendreon.
In addition, Dendreon is in compliance with all applicable registration and
listing requirements set forth in 21 U.S.C. Section 360 and 21 CFR Part 207 and
all similar applicable laws and regulations, except for noncompliances which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Dendreon.
30
(d) Neither Dendreon nor any Representative of Dendreon, nor to the
knowledge of Dendreon, any of its licensees or assignees of Dendreon
Intellectual Property has received any notice since January 1, 1999 that the FDA
or any other governmental entity has initiated, or threatened to initiate, any
action to suspend any clinical trial, withdraw approval of any Investigational
New Drug or otherwise restrict the preclinical research on or clinical study of
any Dendreon Pharmaceutical Product or any biological or drug product being
developed by any licensee or assignee of Dendreon Intellectual Property based on
such intellectual property, or to recall, suspend or otherwise restrict the
manufacture of any Dendreon Pharmaceutical Product.
(e) Neither Dendreon nor, to the knowledge of Dendreon, any of its
officers, key employees, agents or clinical investigators acting for Dendreon,
has committed any act, made any statement or failed to make any statement that
would reasonably be expected to provide a basis for the FDA to invoke its policy
with respect to "Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities" set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any
amendments thereto. Additionally, neither Dendreon, nor to the knowledge of
Dendreon, any officer, key employee or agent of Dendreon has been convicted of
any crime or engaged in any conduct that would reasonably be expected to result
in (i) debarment under 21 U.S.C. Section 3351 or any similar state law or (ii)
exclusion under 42 U.S.C. Section 1320a-7 or any similar state law or
regulation.
(f) All animal studies, preclinical tests and human clinical trials,
performed in connection with or as the basis for any regulatory approval
required for the Dendreon Pharmaceutical Products have been conducted in
accordance with experimental protocols, informed consents, procedures and
controls generally used by qualified experts in the animal, preclinical or
clinical study of products comparable to those being developed by Dendreon.
(g) Dendreon has provided Corvas with copies of any and all notices of
inspectional observations, establishment inspection reports and any other
documents received from governmental entities, that indicate or suggest lack of
compliance with the regulatory requirements of such governmental entities.
Dendreon has made available to Corvas for review all correspondence to or from
all governmental entities, minutes of meetings, written reports of phone
conversations, visits or other contact with governmental entities, notices of
inspectional observations, establishment inspection reports, and all other
documents concerning communications to or from governmental entities, or
prepared by or which bear in any way on Dendreon's compliance with regulatory
requirements of governmental entities, or on the likelihood of timing of
approval of any Dendreon Pharmaceutical Products.
(h) There are no proceedings pending with respect to a violation by
Dendreon of the FDCA, FDA regulations adopted thereunder, the Controlled
Substance Act or any other legislation or regulation promulgated by any other
United States governmental entity that reasonably might be expected to have a
Material Adverse Effect on Dendreon or to result in criminal liability.
4.14. Employee Benefit Plans.
(a) There are no "employee pension benefit plans," as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or "multiemployer
31
plans" as defined in Section 3(37) of ERISA, maintained or contributed to by
Dendreon or any trade or business (whether or not incorporated) (an "ERISA
Affiliate") which is aggregated with Dendreon pursuant to Section 414 of the
Code for the benefit of its current or former employees. Dendreon has set forth
on Schedule 4.14 of the Dendreon Disclosure Schedule all "employee benefit
plans", as defined in Section 3(3) of ERISA, and all bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, welfare,
severance, fringe benefit (including, but not limited to, benefits relating to
Company automobiles, clubs, vacation, child care, parenting, sabbatical, sick
leave, medical, dental, hospitalization, life insurance and other types of
insurance), and other similar employee benefit plans, arrangements, and
employment and consulting agreements, whether or not such plans, arrangements,
or agreements are "employee benefit plans", written or otherwise, for the
benefit of or relating to, any current or former employee of Dendreon or any
ERISA Affiliate (together the "Dendreon Employee Plans").
(b) With respect to each Dendreon Employee Plan, Dendreon has made
available to Corvas a true and correct copy of (i) the annual report (Form 5500)
for the most recent plan year that is filed with the Internal Revenue Service
("IRS") or U. S. Department of Labor, if applicable, (ii) the current plan
document and summary plan description, and all amendments thereto, for each such
Dendreon Employee Plan, (iii) each trust agreement and group annuity contract,
if any, relating to such Dendreon Employee Plan, (iv) the most recent actuarial
report or valuation relating to an Dendreon Employee Plan subject to Title IV of
ERISA, and (v) the most recent IRS determination letter, where applicable.
(c) With respect to the Dendreon Employee Plans, individually and in
the aggregate, Dendreon and its ERISA Affiliates are in full compliance with the
applicable provisions of ERISA, the regulations and published authorities
thereunder, and all other laws applicable with respect to all such Dendreon
Employee Plans, and no event has occurred, and to the knowledge of Dendreon,
there exists no condition or set of circumstances in connection with which
Dendreon could be subject to any liability that is reasonably likely to have a
Material Adverse Effect on Dendreon, under ERISA, the Code, or any other
applicable law. Dendreon has classified all individuals who perform services for
Dendreon correctly under each Dendreon Employee Plan, ERISA and the Code as
common law employees, independent contractors or leased employees. Except to the
extent required under Section 4980B of the Code, neither Dendreon nor any ERISA
Affiliate provides health or welfare benefits (through the purchase of insurance
or otherwise) for any retired or former employees.
(d) With respect to the Dendreon Employee Plans, individually and in
the aggregate, there are no benefit obligations required to be funded for which
contributions have not been made or properly accrued, and there are no unfunded
benefit obligations which have not been accounted for by reserves, or otherwise
properly footnoted in accordance with generally accepted accounting principles
on the financial statements of Dendreon. Except as disclosed in Dendreon SEC
Reports filed prior to the date of this Agreement and except as provided for in
this Agreement, neither Dendreon nor any ERISA Affiliate is a party to any oral
or written (i) union or collective bargaining agreement, (ii) agreement with any
officer or other key employee of Dendreon, the benefits of which are contingent,
or the terms of which are materially altered upon the occurrence of a
transaction involving Dendreon of the nature contemplated by this Agreement,
(iii) agreement with any officer of Dendreon providing any
32
term of employment or compensation guarantee extending for a period longer than
one year from the date hereof or for the payment of compensation in excess of
$100,000 per annum, or (iv) agreement or plan, including any stock option plan,
stock appreciation right plan, restricted stock plan, or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
4.15. Compliance with Laws. Dendreon has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state, or local statute, law, or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which would not have a Material Adverse Effect
on Dendreon.
4.16. Interested Party Transactions. Except as disclosed in the
Dendreon SEC Reports,, since the date of Dendreon's last proxy statement to its
stockholders, no event has occurred that would be required to be reported by
Dendreon as a Certain Relationship or Related Transaction pursuant to Item 404
of Regulation S-K promulgated by the SEC.
4.17. No Existing Discussions. Dendreon is not engaged, directly or
indirectly, in any discussions or negotiations with any other party with respect
to a Dendreon Acquisition Proposal.
4.18. No Secured Debt. Except as disclosed in the Dendreon SEC reports,
there is not now any secured debt (including capitalized leases) of Dendreon.
The existence of any outstanding secured debt (including capitalized leases) of
Dendreon does not violate the terms of any material note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument or other agreement or commitment to which Dendreon is a
party or by which Dendreon or any of its assets or properties is bound or
encumbered.
4.19. Opinion of Financial Advisor. The financial advisor of Dendreon,
Xxxxxxx & Company, Inc., has delivered to the Board of Directors of Dendreon an
opinion dated the date of this Agreement to the effect that the Conversion
Number is fair from a financial point of view to the stockholders of Dendreon.
4.20. Dendreon's Tax Representation Relating to Reorganization. In
connection with the Merger, neither Dendreon nor any person related to Dendreon
(as defined in Treasury Regulation Section 1.368-1(e)(3)) will have acquired
directly or through any transaction, agreement or arrangement with any other
person, stock of Corvas with any consideration other than common stock of
Dendreon. There is no plan or intention by Dendreon or any person related to
Dendreon (as defined in Treasury Regulation Section 1.368-1(e)(3)) to acquire or
redeem any of the stock of Dendreon issued in the Merger either directly or
through any transaction, agreement, or arrangement with any other person;
provided, however, that Dendreon may repurchase Dendreon stock issued in the
Merger pursuant to an open market stock repurchase program, as described in
Revenue Ruling 99-58, 1999-2 C.B. 701.
33
4.21. Insurance. Each policy of insurance maintained by or for the
benefit of Dendreon (collectively, the "Dendreon Policies") is listed in
Schedule 4.21 of the Dendreon Disclosure Schedule. Except as noted in Schedule
4.21 of the Dendreon Disclosure Schedule: (i) Dendreon is the sole beneficiary
of each of the Dendreon Policies; (ii) each of the Dendreon Policies is in full
force and effect, and Dendreon has received no notice of intent to cancel any of
the Dendreon Policies and is not otherwise aware of the intent of any carrier to
cancel any of the Dendreon Policies or of any basis for any such cancellation;
(iii) the carrier or carriers under each of the Dendreon Policies are reputable,
and Dendreon has no information leading it to believe that any such carrier is
experiencing or is likely to experience liquidity problems; and (iv) the
Dendreon Policies, in the aggregate are sufficient in kind and coverage limits
to provide risk protection comparable to that provided to prudent companies
engaged in activities similar to those engaged in by Dendreon under similar
policies customarily maintained by such companies.
4.22. Employment Matters. Dendreon has complied with, is not in
violation of, and has not received any notices of violation with respect to all
applicable laws, rules and regulations relating to employment, including the
Immigration Reform and Control Act, as amended, those related to wages, hours
(including payment of overtime required by state or federal law), equal
employment opportunity and the payment of state and federal payroll taxes,
including Social Security taxes. There are no claims, actions, suits,
investigations or proceedings pending of which it has notice or, to the
knowledge of Dendreon, threatened against or affecting Dendreon alleging any
violation of any of the foregoing laws, rules or regulations.
4.23. Ownership and Interim Operations of Sub and LLC. All outstanding
capital stock of Sub and all ownership interests in LLC are owned by Dendreon.
Sub and LLC were formed solely for the purpose of engaging in the transactions
contemplated by this Agreement, have engaged in no other business activities,
and have conducted their respective operations only as contemplated by this
Agreement.
ARTICLE V
CONDUCT OF BUSINESS
5.01. Covenants of Dendreon and Corvas.
(a) During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time
(the "Pre-Closing Period"), each of Dendreon and Corvas agrees (except to the
extent that the other party shall otherwise consent in writing), to carry on its
business in the usual, regular, and ordinary course in substantially the same
manner as previously conducted, to pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, to pay or perform other
obligations when due, and, to the extent consistent with such business, to use
all reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, to keep available the services of its
present officers and key employees and preserve its relationships with
customers, suppliers, clinical investigators, clinical research organizations,
distributors, licensors, licensees, and others having business dealings with it,
to the end that its goodwill and ongoing businesses shall not be materially
impaired at the Effective Time. Dendreon and Corvas shall each promptly notify
the other of any event or occurrence not in the ordinary course of business of
Dendreon or
34
Corvas, respectively. Except as set forth in Part 5.01 of the Corvas Disclosure
Schedule, in the case of Corvas, or of the Dendreon Disclosure Schedule, in the
case of Dendreon, each of Dendreon and Corvas shall not during the Pre-Closing
Period, without the prior written consent of the other party (which consent may
not be unreasonably withheld or delayed):
(i) Accelerate, amend, or change the period of exercisability of
options or restricted stock granted under any employee stock plan of such party
or otherwise or authorize cash payments in exchange for any options granted
under any of such plans except as required by the terms of such plans or any
related agreements or other agreements in effect as of the date of this
Agreement;
(ii) Declare or pay any dividends on or make any other distributions
(whether in cash, stock, or property) in respect of any of its capital stock or
split, combine, or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of, or in substitution
for shares of capital stock of such party, or purchase or otherwise acquire,
directly or indirectly, any shares of its capital stock;
(iii) Acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association, or other business organization or division, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to the business of such party;
(iv) Sell, lease, license, or otherwise dispose of any of its
properties or assets which are material, individually or in the aggregate, to
the business of such party;
(v) (A) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary or
wages of employees other than officers of Dendreon or Corvas in accordance with
past practices, (B) except as provided in Section 6.16, increase or agree to
increase the compensation payable or to become payable to officers of Dendreon
or Corvas or grant any additional severance or termination pay to, or enter into
any employment or severance agreements with such officers, (C) grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any employee, except in accordance with past practices, (D)
enter into any collective bargaining agreement, (E) establish, adopt, enter
into, or amend any bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance, or other plan, trust, fund, policy, or arrangement for
the benefit of any directors, officers, or employees, or (F) establish any new
executive employee position;
(vi) Revalue any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable, other than (i)
revaluations that the auditors for such entity advise that such revaluation is
required in accordance with generally accepted accounting principles or (ii) in
the ordinary course of business;
(vii) Amend or propose to amend its charter documents or Bylaws,
except as contemplated by this Agreement;
35
(viii) Make any capital expenditure or commitment for which it is not
contractually bound at the date hereof except (i) expenditures and commitments
incurred in the ordinary course of the existing business of such party, and (ii)
other capital expenditures and commitments not to exceed $500,000 in the
aggregate, in the case of Corvas, or $2 million, in the case of Dendreon; or
(ix) Take, or agree in writing or otherwise to take, any action which
is reasonably likely to make any of such party's representations or warranties
contained in this Agreement untrue or incorrect in any material respect on the
date made (to the extent so limited) or as of the Effective Time.
(x) Issue, deliver, or sell or authorize or propose the issuance,
delivery, or sale of, or purchase or propose the purchase of, any Corvas Stock
Rights or Dendreon Stock Rights, as applicable, other than (A) the grant of
options to employees in a manner consistent with past practices and pursuant to
currently existing stock option plans, (B) the issuance of shares upon the
exercise of options outstanding as of the date hereof (or issued pursuant to
subsection (A) above), (C) pursuant to binding obligations of the issuer to
issue securities (excluding securities issuable at the option of the issuer)
entered into prior to the date hereof and disclosed on the Corvas Disclosure
Schedule or the Dendreon Disclosure Schedule, as applicable and (C) in the case
of Dendreon, in addition to the issuances contemplated under (A), (B) and (C)
above, up to $10,000,000 in cumulative issuances of securities provided that the
per share issuance price for the Dendreon common stock shall not be less than
the closing price of Dendreon common stock on Nasdaq on the last trading day
immediately prior to the announcement of the execution of this Agreement.
(xi) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of such party's subsidiaries or guarantee any debt
securities of others, or voluntarily prepay any outstanding indebtedness, except
(A) pursuant to existing credit agreements, (B) in the case of Dendreon only,
for Dendreon's refinancing of its existing capital lease financing arrangements
or incurrence of new capital leases in the ordinary course of its business.
(b) Except as expressly contemplated by this Agreement, subject to
Section 6.01, Corvas shall not, without the prior written consent of Dendreon,
transfer or license to any person or entity or otherwise extend, amend, or
modify any rights to the Corvas Intellectual Property Rights, other than in the
ordinary course of business consistent with past practices or pursuant to
obligations entered into prior to the date hereof.
5.02. Cooperation. Subject to compliance with applicable law, from the
date hereof until the Effective Time, each of Dendreon and Corvas shall confer
on a regular and frequent basis with one or more Representatives of the other
party to report operational matters of materiality and the general status of
ongoing operations and shall promptly provide the other party and its counsel
with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Combination, and the transactions
contemplated hereby and thereby.
36
ARTICLE VI
ADDITIONAL AGREEMENTS AND COVENANTS
6.01. No Solicitation by Corvas.
(a) Corvas shall not directly or indirectly, and shall not authorize or
permit any of its Representatives directly or indirectly to, (i) solicit,
initiate, encourage, induce or facilitate the making, submission or announcement
of any Corvas Acquisition Proposal or take any action that could reasonably be
expected to lead to a Corvas Acquisition Proposal, (ii) furnish any information
regarding Corvas to any Person in connection with or in response to a Corvas
Acquisition Proposal or an inquiry or indication of interest that could lead to
a Corvas Acquisition Proposal, (iii) engage in discussions or negotiations with
any Person with respect to any Corvas Acquisition Proposal, (iv) approve,
endorse or recommend any Corvas Acquisition Proposal or (v) enter into any
letter of intent or similar document or any contract contemplating or otherwise
relating to any Corvas Acquisition Transaction; provided, however, that this
Section 6.01(a) shall not prohibit (A) Corvas, or the Board of Directors of
Corvas from furnishing nonpublic information regarding Corvas to, or entering
into discussions or negotiations with, any Person in response to a Corvas
Superior Offer that is submitted to Corvas by such Person (and not withdrawn) if
(1) neither Corvas nor any of its Representatives shall have violated any of the
restrictions set forth in this Section 6.01, (2) the Board of Directors of
Corvas determines, in good faith, based on the advice of its outside legal
counsel, that failing to take such action would reasonably be expected to result
in a breach of the fiduciary duties of the Board of Directors of Corvas under
applicable law, (3) at least two business days prior to furnishing any such
nonpublic information to, or entering into discussions or negotiations with,
such Person, Corvas gives Dendreon written notice of the identity of such Person
and of Corvas' intention to furnish nonpublic information to, or enter into
discussions or negotiations with, such Person, and Corvas receives from such
Person an executed confidentiality agreement containing customary limitations on
the use and disclosure of all nonpublic written and oral information furnished
to such Person or any of such Person's Representatives by or on behalf of Corvas
on terms no less favorable to Corvas than the Nondisclosure Agreement and a
standstill agreement with customary restrictions on the purchase of Corvas stock
on terms no less favorable to Corvas than the Standstill Agreement, and (4) at
least two business days prior to furnishing any such nonpublic information to
such Person, Corvas furnishes such nonpublic information to Dendreon (to the
extent such nonpublic information has not been previously furnished by Corvas to
Dendreon); or (B) Corvas from complying with Rule 14e-2 promulgated under the
Exchange Act with regard to a Corvas Acquisition Proposal. Without limiting the
generality of the foregoing, Corvas acknowledges and agrees that any violation
of any of the restrictions set forth in the preceding sentence by any of its
Representatives, whether or not such Representatives is purporting to act on
behalf of Corvas, shall be deemed to constitute a breach of this Section 6.01 by
Corvas.
(b) Corvas shall promptly (and in no event later than 24 hours after
receipt of any Corvas Acquisition Proposal, any inquiry or indication of
interest that could lead to a Corvas Acquisition Proposal or any request for
nonpublic information) advise Dendreon orally and in writing of any Corvas
Acquisition Proposal, any inquiry or indication of interest that could lead to a
Corvas Acquisition Proposal or any request for nonpublic information relating to
Corvas
37
(including the identity of the Person making or submitting such Corvas
Acquisition Proposal, inquiry, indication of interest or request, and the terms
thereof) that is made or submitted by any Person during the Pre-Closing Period.
Corvas shall keep Dendreon fully informed on a prompt basis with respect to the
status of any such Corvas Acquisition Proposal, inquiry, indication of interest
or request and any modification or proposed modification thereto.
(c) Corvas shall immediately cease and cause to be terminated any
discussions or negotiations existing prior to the date hereof with any Person
(other than Dendreon) that relate to any Corvas Acquisition Proposal, except as
may be provided for in Section 6.01(a). Corvas agrees not to release any Person
(other than Dendreon) from or waive any provision of any confidentiality,
"standstill" or similar agreement to which it is a party and will use its best
efforts to enforce each such agreement at the request of Dendreon.
6.02. No Solicitation by Dendreon
(a) Dendreon shall not directly or indirectly, and shall not authorize
or permit any of its Representatives directly or indirectly to, (i) solicit,
initiate, encourage, induce or facilitate the making, submission or announcement
of any Dendreon Acquisition Proposal or take any action that could reasonably be
expected to lead to a Dendreon Acquisition Proposal, (ii) furnish any
information regarding Dendreon to any Person in connection with or in response
to a Dendreon Acquisition Proposal or an inquiry or indication of interest that
could lead to a Dendreon Acquisition Proposal, (iii) engage in discussions or
negotiations with any Person with respect to any Dendreon Acquisition Proposal,
(iv) approve, endorse or recommend any Dendreon Acquisition Proposal or (v)
enter into any letter of intent or similar document or any contract
contemplating or otherwise relating to any Dendreon Acquisition Transaction;
provided, however, that this Section 6.02(a) shall not prohibit (A) Dendreon, or
the Board of Directors of Dendreon from furnishing nonpublic information
regarding Dendreon to, or entering into discussions or negotiations with, any
Person in response to a Dendreon Superior Offer that is submitted to Dendreon by
such Person (and not withdrawn) if (1) neither Dendreon nor any of its
Representatives shall have violated any of the restrictions set forth in this
Section 6.02, (2) the Board of Directors of Dendreon determines, in good faith,
based on the advice of its outside legal counsel, that failure to take such
action would reasonably be expected to result in a breach of the fiduciary
duties of the Board of Directors of Dendreon under applicable law, (3) at least
two business days prior to furnishing any such nonpublic information to, or
entering into discussions or negotiations with, such Person, Dendreon gives
Corvas written notice of the identity of such Person and of Dendreon's intention
to furnish nonpublic information to, or enter into discussions or negotiations
with, such Person, and Dendreon receives from such Person an executed
confidentiality and standstill agreement containing customary limitations on the
use and disclosure of all nonpublic written and oral information furnished to
such Person or any of such Person's Representatives by or on behalf of Dendreon
on terms no less favorable to Dendreon than the Nondisclosure Agreement and a
standstill agreement with customary restrictions on the purchase of Dendreon
stock on terms no less favorable to Dendreon than the Standstill Agreement, and
(4) at least two business days prior to furnishing any such nonpublic
information to such Person, Dendreon furnishes such nonpublic information to
Corvas (to the extent such nonpublic information has not been previously
furnished by Dendreon to Corvas); or (B) Dendreon from complying with Rule 14e-2
promulgated under the Exchange Act with regard to a Dendreon Acquisition
Proposal. Without limiting the generality of the foregoing,
38
Dendreon acknowledges and agrees that any violation of any of the restrictions
set forth in the preceding sentence by any of its Representatives, whether or
not such Representatives is purporting to act on behalf of Dendreon, shall be
deemed to constitute a breach of this Section 6.02 by Dendreon.
(b) Dendreon shall promptly (and in no event later than 24 hours after
receipt of any Dendreon Acquisition Proposal, any inquiry or indication of
interest that could lead to a Dendreon Acquisition Proposal or any request for
nonpublic information) advise Corvas orally and in writing of any Dendreon
Acquisition Proposal, any inquiry or indication of interest that could lead to a
Dendreon Acquisition Proposal or any request for nonpublic information relating
to Dendreon (including the identity of the Person making or submitting such
Dendreon Acquisition Proposal, inquiry, indication of interest or request, and
the terms thereof) that is made or submitted by any Person during the
Pre-Closing Period. Dendreon shall keep Corvas fully informed on a prompt basis
with respect to the status of any such Dendreon Acquisition Proposal, inquiry,
indication of interest or request and any modification or proposed modification
thereto.
(c) Dendreon shall immediately cease and cause to be terminated any
discussions or negotiations existing prior to the date hereof with any Person
(other than Corvas) that relate to any Dendreon Acquisition Proposal, except as
may be provided for in Section 6.01(a). Dendreon agrees not to release any
Person (other than Corvas) from or waive any provision of any confidentiality,
"standstill" or similar agreement to which it is a party and will use its best
efforts to enforce each such agreement at the request of Parent.
6.03. Joint Proxy Statement; Registration Statement.
(a) As promptly as practical after the execution of this Agreement,
Dendreon and Corvas shall prepare and file with the SEC a joint proxy
statement/prospectus to be sent to the stockholders of Dendreon and Corvas in
connection with the Dendreon Stockholders' Meeting and the Corvas Stockholders'
Meeting, respectively (the "Joint Proxy Statement"), and Dendreon shall prepare
and file with the SEC a registration statement on Form S-4 pursuant to which the
shares of Dendreon Common Stock to be issued as a result of the Merger will be
registered with the SEC (the "Registration Statement"), in which the Joint Proxy
Statement will be included as a prospectus. Each of Dendreon and Corvas shall
use its best efforts to cause the Form S-4 Registration Statement and the Joint
Proxy Statement to comply with the rules and regulations promulgated by the SEC
and to respond promptly to any comments of the SEC or its staff. Dendreon and
Corvas shall use all reasonable efforts to cause the Registration Statement to
become effective as soon after such filing as practical. Dendreon will use its
best efforts to cause the Joint Proxy Statement to be mailed to Dendreon's
stockholders, and Corvas will use its best efforts to cause the Joint Proxy
Statement to be mailed to the Corvas' stockholders, as promptly as practicable
after the Registration Statement is declared effective under the Securities Act
but in each case within ten business days thereafter. Dendreon and Corvas shall
make all other necessary filings with respect to the Merger under the Securities
Act and the Exchange Act and the rules and regulations thereunder and shall use
reasonable efforts to cause their respective Annual Reports on Form 10-K for the
year ended December 31, 2002 to be filed as promptly as possible.
39
(b) Corvas shall take such action as may be necessary to ensure that
(i) the information to be supplied by Corvas for inclusion in the Registration
Statement shall not at the time the Registration Statement 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 in the Registration Statement or necessary
in order to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading, and (ii) the
information supplied by Corvas for inclusion in the Joint Proxy Statement shall
not, on the date the Joint Proxy Statement is first mailed to stockholders of
Corvas or Dendreon, at the time of the Corvas Stockholders' Meeting and the
Dendreon Stockholders' Meeting, and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, 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 in the Joint
Proxy Statement 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 for the Corvas Stockholders' Meeting or the Dendreon
Stockholders' Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to Corvas or any of its Affiliates,
officers, or directors should be discovered by Corvas which should be set forth
in an amendment to the Registration Statement or a supplement to the Joint Proxy
Statement, Corvas shall promptly so inform Dendreon.
(c) Dendreon shall take such action as may be necessary to ensure that
(i) the information supplied by Dendreon for inclusion in the Registration
Statement shall not at the time the Registration Statement 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 in the Registration Statement or necessary
in order to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading, and (ii) the
information supplied by Dendreon for inclusion in the Joint Proxy Statement
shall not on the date the Joint Proxy Statement is first mailed to stockholders
of Dendreon or Corvas, at the time of the Dendreon Stockholders' Meeting and
Corvas Stockholders' Meeting, and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, 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 in the Joint
Proxy Statement 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 for the Dendreon Stockholders' Meeting or the Corvas
Stockholders' Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to Dendreon or any of its Affiliates,
officers, or directors should be discovered by Dendreon which should be set
forth in an amendment to the Registration Statement or a supplement to the Joint
Proxy Statement, Dendreon shall promptly so inform Corvas.
(d) Dendreon shall include as exhibits to the Registration Statement
(i) substantially identical opinions of Xxxxxx Godward LLP and Stoel Rives LLP
(the opinion of each firm to be addressed to such firm's respective client), in
form and substance reasonably satisfactory to Dendreon and to Corvas, to the
effect the Combination will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and (ii) the
consents of Xxxxxx Godward LLP and Stoel Rives LLP to be named as required by
the Securities Act with respect to information contained in the section of the
Registration Statement titled
40
"Material Federal Income Tax Consequences". In rendering such opinions and in
reviewing the information in the Registration Statement with respect to the
federal income tax consequences of the Combination, counsel may request and rely
upon customary representations and covenants contained in certificates of
officers of Dendreon, Sub, LLC and Corvas, and Dendreon, Sub, LLC and Corvas
shall provide such certificates.
6.04. Access to Information. Upon reasonable notice and to the extent
permitted under applicable law (including anti-trust laws and regulations) and
the provisions of agreements to which Dendreon or Corvas, as the case may be, is
a party, Corvas and Dendreon shall each afford to the officers, employees,
accountants, counsel, and other Representatives of the other, access, during
normal business hours during the Pre-Closing Period, to all its properties,
books, contracts, commitments, and records and, during such period, each of
Corvas and Dendreon shall furnish promptly to the other (a) a copy of each
report, schedule, registration statement, and other document filed or received
by it during such period pursuant to the requirements of federal securities laws
and (b) all other information concerning its business, properties, and personnel
as such other party may reasonably request. Unless otherwise required by law,
the parties will hold any such information which is non-public in confidence in
accordance with the Nondisclosure Agreement. No information or knowledge
obtained in any investigation pursuant to this Section 6.04 shall affect or be
deemed to modify a representation or warranty construed in this Agreement or the
conditions to the obligations of the parties to consummate the Merger.
6.05. Corvas Stockholders' Meetings.
(a) Corvas shall take all action necessary under all applicable laws to
call, give notice of and hold a meeting of the holders of Corvas Common Stock to
vote on a proposal to adopt this Agreement (the "Corvas Stockholders' Meeting").
The Corvas Stockholders' Meeting shall be held (on a date selected by Corvas in
consultation with Dendreon) as promptly as practicable after the Registration
Statement is declared effective under the Securities Act but in any event within
45 calendar days thereafter. Corvas shall use its reasonable efforts to solicit
from its stockholders proxies for the adoption of this Agreement and shall
ensure that all proxies solicited in connection with the Corvas Stockholders'
Meeting are solicited in compliance with all applicable laws.
(b) Subject to Section 6.05(c) below: (i) the Joint Proxy Statement
shall include a statement to the effect that the Board of Directors of Corvas
unanimously recommends that Corvas' stockholders vote to adopt this Agreement at
the Corvas Stockholders' Meeting (the unanimous recommendation of Corvas' Board
of Directors that Corvas' stockholders vote to adopt this Agreement being
referred to as the "Corvas Board Recommendation"); and (ii) the Corvas Board
Recommendation shall not be withdrawn or modified in a manner adverse to
Dendreon, and no resolution by the Board of Directors of Corvas or any committee
thereof to withdraw or modify the Corvas Board Recommendation in a manner
adverse to Dendreon shall be adopted or proposed; it being expressly understood
that, if the Corvas Board Recommendation is no longer unanimous, it shall be
deemed modified in a manner adverse to Dendreon.
(c) Notwithstanding anything to the contrary contained in Section
6.05(b), at any time prior to the adoption of this Agreement by the Required
Corvas Stockholder Vote, the Corvas
41
Board Recommendation may be withdrawn or modified in a manner adverse to
Dendreon if: (i) an unsolicited, bona fide written offer is made to Corvas by a
third party for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transaction, and such offer is
not withdrawn; (ii) Corvas' Board of Directors determines in good faith (after
consultation with an independent financial advisor of national reputation) that
such offer constitutes a Corvas Superior Offer; (iv) Corvas' Board of Directors
determines in good faith, based on the advice of its outside legal counsel,
that, in light of such Corvas Superior Offer, failing to withdraw or modify of
the Corvas Board Recommendation would be reasonably likely to result in a breach
of the fiduciary duties of Corvas' Board of Directors to Corvas' stockholders
under applicable laws; (v) the Corvas Board Recommendation is not withdrawn or
modified in a manner adverse to Dendreon at any time prior to three business
days after Dendreon receives written notice from Corvas confirming that Corvas'
Board of Directors has determined that such offer is a Corvas Superior Offer;
and (vi) neither Corvas nor any of its Representatives shall have violated any
of the restrictions set forth in Section 6.01.
(d) Corvas' obligation to call, give notice of and hold the Corvas
Stockholders' Meeting in accordance with Section 6.05(a) shall not be limited or
otherwise affected by the commencement, disclosure, announcement or submission
of any Corvas Superior Offer or other Corvas Acquisition Proposal, or by any
withdrawal or modification of the Corvas Board Recommendation.
6.06. Dendreon Stockholders' Meetings
(a) Dendreon shall take all action necessary under all applicable laws
to call, give notice of and hold a meeting of the holders of Dendreon Common
Stock to vote on a proposal to approve the Share Issuance (the "Dendreon
Stockholders' Meeting"). The Dendreon Stockholders' Meeting shall be held (on a
date selected by Dendreon in consultation with Corvas) as promptly as
practicable after the Corvas Stockholders' Meeting but in any event within 3
calendar days thereafter. Dendreon shall use its reasonable efforts to solicit
from its stockholders proxies for the approval of the Share Issuance and shall
ensure that all proxies solicited in connection with the Dendreon Stockholders'
Meeting are solicited in compliance with all applicable laws.
(b) Subject to Section 6.06(c) below: (i) the Joint Proxy Statement
shall include a statement to the effect that the Board of Directors of Dendreon
unanimously recommends that Dendreon's stockholders vote to adopt this Agreement
at the Dendreon Stockholders' Meeting (the unanimous recommendation of
Dendreon's Board of Directors that Dendreon's stockholders vote to adopt this
Agreement being referred to as the "Dendreon Board Recommendation"); and (ii)
the Dendreon Board Recommendation shall not be withdrawn or modified in a manner
adverse to Corvas, and no resolution by the Board of Directors of Dendreon or
any committee thereof to withdraw or modify the Dendreon Board Recommendation in
a manner adverse to Corvas shall be adopted or proposed; it being expressly
understood that, if the Corvas Board Recommendation is no longer unanimous, it
shall be deemed modified in a manner adverse to Dendreon.
42
(c) Notwithstanding anything to the contrary contained in Section
6.06(b), at any time prior to the adoption of this Agreement by the Required
Dendreon Stockholder Vote, the Dendreon Board Recommendation may be withdrawn or
modified in a manner adverse to Corvas if: (i) an unsolicited, bona fide written
offer is made to Dendreon by a third party for a merger, consolidation, business
combination, sale of substantial assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transaction,
and such offer is not withdrawn; (ii) Dendreon's Board of Directors determines
in good faith (after consultation with an independent financial advisor of
national reputation) that such offer constitutes a Dendreon Superior Offer; (iv)
Dendreon's Board of Directors determines in good faith, based on the advice of
its outside legal counsel, that, in light of such Dendreon Superior Offer,
failing to withdraw or modify the Dendreon Board Recommendation would be
reasonably likely to result in a breach of the fiduciary duties of Dendreon's
Board of Directors to the Dendreon's stockholders under applicable laws; (v) the
Dendreon Board Recommendation is not withdrawn or modified in a manner adverse
to Corvas at any time prior to three business days after Corvas receives written
notice from Dendreon confirming that Dendreon's Board of Directors has
determined that such offer is a Dendreon Superior Offer; and (vi) neither
Dendreon nor any of its Representatives shall have violated any of the
restrictions set forth in Section 6.02.
(d) Dendreon's obligation to call, give notice of and hold the Dendreon
Stockholders' Meeting in accordance with Section 6.06(a) shall not be limited or
otherwise affected by the commencement, disclosure, announcement or submission
of any Dendreon Superior Offer or other Dendreon Acquisition Proposal, or by any
withdrawal or modification of the Dendreon Board Recommendation.
6.07. Legal Conditions to Merger.
Each of Dendreon and Corvas will take all reasonable actions necessary
to comply promptly with all legal requirements which may be imposed on it with
respect to the Merger (which actions shall include filings with any other
Governmental Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon either of them
in connection with the Merger. Each of Dendreon and Corvas will take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order, or approval of, or any exemption
by, any Governmental Entity or other public third party, required to be obtained
or made by Dendreon or Corvas in connection with the Merger or the taking of any
action contemplated thereby or by this Agreement.
6.08. Payment of Taxes.
(a) Corvas shall pay prior to the Effective Time (i) all Taxes required
to be paid prior to that day, and (ii) shall withhold with respect to its
employees all federal and state income taxes, FICA, FUTA, and other Taxes
required to be withheld.
(b) Dendreon shall pay prior to the Effective Time (i) all Taxes
required to be paid prior to that day, and (ii) shall withhold with respect to
its employees all federal and state income taxes, FICA, FUTA, and other Taxes
required to be withheld.
43
6.09. Affiliates. Within two weeks of the date of this Agreement,
Corvas will provide Dendreon with a list of those persons who are, in Corvas'
reasonable judgment, "affiliates" of Corvas within the meaning of Rule 145 (each
such person who is an "affiliate" of Corvas within the meaning of Rule 145 is
referred to as an "Affiliate") promulgated under the Securities Act ("Rule
145"). Corvas shall provide Dendreon such information and documents as Dendreon
shall reasonably request for purposes of reviewing such list and shall notify
Dendreon in writing regarding any change in the identity of its Affiliates prior
to the Closing Date.
6.10. Public Disclosure. Any public disclosures by Dendreon or Corvas
with respect to the Combination or this Agreement, or with respect to anything
involving or referring to the other, shall be made in accordance with the terms
of the Nondisclosure Agreement.
6.11. Tax-Free Reorganization.
(a) Dendreon and Corvas shall each use its best efforts to cause the
Combination to be treated as a reorganization within the meaning of Section
368(a) of the Code.
(b) To the extent permitted under applicable tax laws, the Combination
shall be reported as a reorganization within the meaning of Section 368(a) of
the Code in all federal, state, and local tax returns after the Effective Time.
(c) Dendreon presently intends for LLC to continue a significant
historic business line of Corvas or use a significant portion of Corvas'
historic business assets in a business after the Combination, in each case
within the meaning of Treasury Regulation Section 1.368-1(d).
(d) Dendreon will own 100% of the equity of LLC after the Combination
and has no plan or intention to cause LLC to take any action that would result
in Dendreon owning less than 100% of the equity of LLC.
(e) Following the Combination, Dendreon has no plan or intention to
merge LLC with or into another corporation (other than Dendreon), sell or
dispose of any LLC equity, or cause LLC to sell or dispose of any of its assets
or the assets acquired from Corvas and Sub, except for dispositions in the
ordinary course of business.
(f) Dendreon, Sub, LLC, Corvas and the stockholders of Corvas will pay
their respective expenses, if any, incurred in connection with the Combination.
(g) No indebtedness between Dendreon and Corvas, between Sub and Corvas
or between LLC and Corvas was issued, acquired or will be settled at a discount.
(h) At the Effective Time, Dendreon and LLC will not own, nor will
either have owned during the past five years, any stock of Corvas.
(i) At the Effective Time, none of Dendreon, Corvas, Sub or LLC is an
investment company as defined Section 368(a)(2)(F)(iii) and (iv) of the Code.
44
6.12. NASDAQ Quotation. Dendreon shall use its best efforts to cause
the shares of Dendreon Common Stock to be issued in the Merger to be approved
for quotation on the Nasdaq National Market, subject to official notice of
issuance, prior to the Closing Date.
6.13. Stock Plans and Other Options.
(a) At the Effective Time, each outstanding option to purchase shares
of Corvas Common Stock under the Corvas Option Plans and each Corvas Non-Plan
Option (collectively, "Corvas Stock Options"), whether vested or unvested, shall
be converted into and become the right to acquire shares of Dendreon Common
Stock, and Dendreon shall assume each such Corvas Stock Option in accordance
with the terms and conditions (as in effect as of the date of this Agreement) of
the Corvas Option Plan under which it was issued and the terms and conditions of
the stock option agreement by which it is evidenced. From and after the
Effective Time, (i) each Corvas Stock Option assumed by Dendreon may be
exercised solely for shares of Dendreon Common Stock, (ii) the number of shares
of Dendreon Common Stock subject to each such Corvas Stock Option shall be equal
to the number of shares of Corvas Common Stock subject to such Corvas Stock
Option immediately prior to the Effective Time multiplied by the Conversion
Number, rounding down to the nearest whole share, (iii) the per share exercise
price under each such Corvas Stock Option shall be adjusted by dividing the per
share exercise price under such Corvas Stock Option by the Conversion Number and
rounding up to the nearest cent, and (iv) any restriction on the exercise of any
such Corvas Stock Option shall continue in full force and effect and the term,
exercisability, vesting schedule and other provisions of such Corvas Stock
Option shall otherwise remain unchanged; provided, however, that each Corvas
Stock Option assumed by Dendreon in accordance with this Section 6.13(a) shall,
in accordance with its terms, be subject to further adjustment as appropriate to
reflect any stock split, stock dividend, reverse stock split, reclassification,
recapitalization or other similar transaction effected subsequent to the
Effective Time. The adjustment provisions herein with respect to any options
which are "incentive stock options" (as defined in Section 422 of the Code)
shall be and is intended to be effected in a manner which is consistent with
Section 424(a) of the Code and which does not modify the incentive stock option
within the meaning of Section 424(h) of the Code. The duration and other terms
of the Corvas Stock Options assumed by Dendreon shall be the same as the terms
of the original option except that all references to Corvas shall be deemed to
be references to Dendreon.
(b) As soon as practicable after the Effective Time, Dendreon shall
deliver to the holders of Corvas Stock Options an appropriate notice setting
forth such holder's rights pursuant thereto and the grants made prior to the
Effective Time pursuant to the Corvas Option Plans or the stock option agreement
by which they are evidenced shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 6.13 after
giving effect to the Merger). Dendreon shall comply with the terms of the Corvas
Option Plans to ensure, to the extent required by, and subject to the provisions
of, the Corvas Option Plans, that Corvas Stock Options which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time.
(c) Dendreon shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Dendreon Common Stock for delivery
under the Corvas Stock Options assumed in accordance with this Section 6.13. As
soon as practicable after the Effective Time,
45
but in no event later than the third business day following the Closing Date,
Dendreon shall file a registration statement on Form S-8 (or any successor or
other appropriate forms) with respect to the shares of Dendreon Common Stock
subject to such Corvas Stock Options and shall use its best efforts to maintain
the effectiveness of such registration statement for so long as such Corvas
Stock Options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, where applicable, Dendreon shall administer
the Corvas Option Plans assumed pursuant to this Section 6.13 in a manner that
complies with Rule 16b-3 promulgated under the Exchange Act.
(d) As of the Effective Time, the Corvas 1991 Employee Stock Purchase
Plan, as amended, (the "Corvas ESPP") shall be terminated. The rights of
participants in the Corvas ESPP with respect to any offering period then
underway under the Corvas ESPP shall be determined by treating the last business
day prior to the Effective Time as the last day of such offering period and by
making such other pro-rata adjustments as may be necessary to reflect the
shortened offering period but otherwise treating such shortened offering period
as a fully effective and completed offering period for all purposes under the
Corvas ESPP; provided that the shortening of the offering period shall be
effected in a manner that is not a modification of the offer within the meaning
of Section 424(h) of the Code. Prior to the Effective Time, Corvas shall take
all actions that are necessary to give effect to the transactions contemplated
by this Section 6.13(d).
(e) Dendreon shall, prior to the Effective Time, cause Dendreon's Board
of Directors to approve the issuance of shares of Dendreon Common Stock
(including shares of Dendreon Common Stock to be issued in connection with the
exercise of any Corvas Stock Options assumed by Dendreon in the Merger) and the
assumption of Corvas Stock Options, with respect to any employees of Corvas who
will become subject to the reporting requirements of Section 16 of the Exchange
Act to the extent necessary for such issuance to be an exempt acquisition
pursuant to SEC Rule 16b-3 and will provide a draft of such resolutions to
Corvas' outside legal counsel for review prior to adoption. Prior to the
Effective Time, the Board of Directors of Corvas shall approve the disposition
of Corvas Common Stock in connection with the Merger by those directors and
officers of Corvas subject to the reporting requirements of Section 16 of the
Exchange Act to the extent necessary for such disposition to be an exempt
disposition pursuant to SEC Rule 16b-3.
6.14. Consents. Each of Dendreon and Corvas shall use all reasonable
efforts to obtain all necessary consents, waivers, and approvals under any of
Dendreon's or Corvas' material agreements, contracts, licenses, or leases in
connection with the Combination.
6.15. Brokers or Finders. Each of Dendreon and Corvas represents, as to
itself and its Affiliates, that no agent, broker, investment banker, financial
advisor, or other firm or person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement except Lazard Freres & Co., LLC,
whose fees and expenses will be paid by Corvas in accordance with Corvas'
agreement with such firm (a copy of which has been delivered by Corvas to
Dendreon prior to the date of this Agreement), and Xxxxxxx & Company, Inc. and
XX Xxxxx Securities Corporation, whose fees and expenses will be paid by
Dendreon in accordance with Dendreon's
46
agreement with such firms (copies of which has been delivered by Dendreon to
Corvas prior to the date of this Agreement.)
6.16. Employee Benefits; Employee Issues.
(a) Dendreon agrees that all employees of Corvas who continue
employment with Dendreon or the Continuing Corporation after the Effective Time
("Continuing Employees") shall be eligible to continue to participate in the
Continuing Corporation's retirement, health, vacation and other non-equity based
employee benefit plans; provided, however, that (a) nothing in this Section 6.16
or elsewhere in this Agreement shall limit the right of Dendreon or the
Continuing Corporation to amend or terminate any such retirement, health,
vacation or other employee benefit plan at any time, and (b) if Dendreon or the
Continuing Corporation terminates any such retirement, health, vacation or other
employee benefit plan, then, the Continuing Employees shall be eligible to
participate in Dendreon's health, vacation and other non-equity based employee
benefit plans, to substantially the same extent as employees of Dendreon in
similar positions and at similar grade levels. With respect to such benefits and
to the extent permitted under the applicable employee benefit plans of Dendreon,
credit for service accrued by Continuing Employees (and eligible dependents) for
employment with Corvas or any of its Subsidiaries prior to the Effective Time
shall be recognized (except to the extent necessary to prevent duplication of
benefits), any pre-existing condition limitations and eligibility waiting
periods applicable to any Continuing Employee under any group health plan shall
be waived, and employees shall be given credit for amounts paid under any Corvas
Employee Plan during the same period for purposes of applying deductibles,
co-payments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the applicable Corvas Employee Plan.
Corvas' employees shall be eligible for grants of stock options after the
Effective Time under Dendreon's 2000 Equity Incentive Plan and 2002 Broad Based
Equity Incentive Plan on the same terms as Dendreon's employees.
(b) Dendreon shall use all reasonable efforts to enter into appropriate
employment agreements with the Chairman of its board of directors, Chief
Executive Officer, and President prior to the Effective Time. Nothing in this
Section 6.16 or elsewhere in this Agreement, however, shall be construed to
create a right in any employee to employment with Dendreon, the Continuing
Corporation or any other Subsidiary of Dendreon and, subject to any binding
written agreement between an employee and Dendreon or the Continuing
Corporation, the employment of each Continuing Employee shall be "at will"
employment.
6.17. Reports. From and after the Effective Time and so long as
necessary in order to permit Corvas' Affiliates to sell the shares of Dendreon
Common Stock received by them as a result of the Merger pursuant to Rule 145
and, to the extent applicable, Rule 144 under the Securities Act, Dendreon will
use its best efforts to file on a timely basis all reports required to be filed
by it pursuant to Section 13 or 15(d) of the Exchange Act, referred to in
paragraph (c)(1) of Rule 144 under the Securities Act (or, if applicable,
Dendreon will use its best efforts to make publicly available the information
regarding itself referred to in paragraph (c)(2) of Rule 144).
6.18. Notification of Certain Matters. Corvas will give prompt notice
to Dendreon upon discovery thereof, and Dendreon will give prompt notice to
Corvas upon discovery thereof, of (a) the occurrence, or failure to occur, of
any event which occurrence or failure would be
47
likely to cause the failure of any of the conditions set forth in Section
7.02(a) or 7.03(a), and (b) any material failure of Corvas or Dendreon, or any
director, officer, employee, agent or Representative thereof, to comply with or
satisfy any covenant, condition, or agreement to be complied with or satisfied
by it hereunder.
6.19. Additional Agreements; Reasonable Efforts. Subject to the terms
and conditions of this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including cooperating fully with the other party. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement or to vest the Continuing Corporation
with full title to all properties, assets, rights, approvals, immunities, and
franchises of either of the Constituent Corporations, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
6.20. Continuing Indemnification.
(a) Dendreon shall guaranty the obligations of Corvas to indemnify its
present and former directors and officers, to the extent of, and in accordance
with, the Certificate of Incorporation and Bylaws of Corvas as in effect on the
date of this Agreement and the Delaware Law. Subject to the Delaware Law,
Corvas' Bylaws relating to indemnification shall not be amended in a manner
which adversely affects the rights of any party entitled to indemnification
thereunder. With respect to any claim relating to an occurrence prior to the
Effective Time, such guarantee shall be subordinate in all respects to the
rights of Corvas and/or such indemnified person under any policy of insurance
maintained by Corvas.
(b) Immediately prior to the Effective Time Corvas will terminate the
existing policy of directors' and officers' liability insurance maintained by
Corvas (the "Existing D&O Policy") and will obtain a "tail" policy on the
Existing D&O Policy until the sixth anniversary of the Effective Time for the
benefit of the Indemnified Persons with respect to acts or omissions occurring
prior to the Effective Time.
(c) The provisions of this Section 6.20 are intended to be in addition
to the rights otherwise available to the current officers and directors of
Corvas by law, charter, statute, bylaws or agreement, and shall operate for the
benefit of, and shall be enforceable by, each of the Indemnified Persons. The
obligations of Dendreon and the Continuing Corporation under this Section 6.20
shall not be terminated, modified or impaired in such a manner as to adversely
affect any Indemnified Person to whom this Section 6.20 applies without the
consent of such affected Indemnified Person (it being expressly agreed that the
Indemnified Person to whom this Section 6.20 applies shall be an express third
party beneficiary of this Section 6.20).
6.21. Board of Directors of Dendreon. Prior to the Effective Time,
Dendreon shall take all necessary actions so that, from and after the Effective
Time, for a period of eighteen months from the Effective Time and thereafter
until duly changed in accordance with applicable law and Dendreon's Certificate
of Incorporation and Bylaws as then in effect, the Board of Directors of
Dendreon will be comprised of not more than ten directors, unless an increase in
the number of directors is authorized by a majority of the Dendreon Board of
Directors which majority shall
48
include at least one of the Corvas nominees referred to in the next sentence or
their duly appointed successors. Prior to the Effective Time, Dendreon shall
take all necessary action (including, if necessary, soliciting and obtaining
resignations of serving board members) to cause two nominees of Corvas, who are
reasonably acceptable to Dendreon and who are serving members of the Corvas
Board of Directors, to be appointed, contingent on the occurrence of the Merger,
to the Dendreon Board of Directors. One such director shall be appointed for a
term expiring at the Dendreon annual meeting in 2005 and the other for a term
expiring at the Dendreon annual meeting in 2006.
ARTICLE VII
CONDITIONS TO MERGER
7.01. Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been adopted by the
requisite vote of the stockholders of Corvas as may be required by law, by the
rules of the Nasdaq National Market, and by any applicable provisions of Corvas'
certificate of incorporation or Bylaws, and the Share Issuance shall have been
approved by the requisite vote of the stockholders of Dendreon as may be
required by law, by the rules of the Nasdaq National Market, and by any
applicable provisions of Dendreon's articles of incorporation or Bylaws.
(b) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings or any proceeding threatened in writing seeking a stop
order. The Joint Proxy Statement shall have been delivered to the stockholders
of Corvas and Dendreon in accordance with the requirements of the Securities Act
and the Exchange Act.
(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction, or other order issued by any court
of competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Combination shall have been issued, nor shall
any proceeding brought by a domestic administrative agency or commission or
other domestic Governmental Entity seeking any of the foregoing be pending or
threatened in writing; nor shall there be any action taken, or any statute,
rule, regulation, or order enacted, entered, enforced, or deemed applicable to
the Combination which makes the consummation of the Combination illegal.
(d) NASDAQ. The shares of Dendreon Common Stock to be issued in the
Merger shall have been approved for quotation on the Nasdaq National Market.
7.02. Additional Conditions to Obligations of Dendreon, Sub and LLC.
The obligations of Dendreon, Sub and LLC to effect the Merger are subject to the
satisfaction of each of the following conditions, any of which may be waived in
writing exclusively by Dendreon, Sub and LLC.
49
(a) Representations and Warranties. The representations and warranties
of Corvas set forth in this Agreement shall be true and correct in all respects
as of the date of this Agreement; provided, however, that for the purposes of
this paragraph, such representations and warranties shall be deemed to be
accurate unless the failure or failures of such representations and warranties
to be accurate, either individually or in the aggregate, has had, or would
reasonably be expected to have, a Material Adverse Effect on Corvas as of the
Closing; it being understood that, for purposes of determining the accuracy of
such representations and warranties, all "Material Adverse Effect"
qualifications and other materiality qualifications, and any similar
qualifications, contained in such representations and warranties shall be
disregarded; and Dendreon shall have received a certificate signed on behalf of
Corvas by the chief executive officer and the chief financial officer of Corvas
to such effect.
(b) Performance of Obligations of Corvas. Corvas shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date; and Dendreon shall have received
a certificate signed on behalf of Corvas by the chief executive officer and the
chief financial officer of Corvas to such effect.
(c) Material Adverse Effect. Since the date of this Agreement, there
has not been a Material Adverse Effect on Corvas which is continuing as of the
Closing.
(d) No Litigation. There shall not be pending any legal proceeding
brought by a Governmental Entity and related to the transactions contemplated by
this Agreement in which, in the reasonable judgment of Dendreon, there is a
reasonable possibility of an outcome that would reasonably be expected to have a
Material Adverse Effect on Corvas.
(e) Tax Opinion. Dendreon shall have received a legal opinion of Stoel
Rives LLP, dated as of the Closing Date and addressed to Dendreon, to the effect
that the Combination will constitute a reorganization within the meaning of
Section 368 of the Code, and if Stoel Rives LLP does not render such opinion or
withdraws or modifies such opinion, this condition shall nonetheless be deemed
to be satisfied if Xxxxxx Godward LLP renders such opinion to Dendreon. In
rendering such opinions, counsel may request and rely upon customary
representations and covenants contained in certificates of officers of Dendreon,
Sub and Corvas, and Dendreon, Sub and Corvas shall provide such certificates.
7.03. Additional Conditions to Obligations of Corvas. The obligation of
Corvas to effect the Merger is subject to the satisfaction of each of the
following conditions, any of which may be waived, in writing, exclusively by
Corvas.
(a) Representations and Warranties. The representations and warranties
of Dendreon, Sub and LLC set forth in this Agreement shall be true and correct
in all respects as of the date of this Agreement; provided, however, that for
the purposes of this paragraph, such representations and warranties shall be
deemed to be accurate unless the failure or failures of such representations and
warranties to be accurate, either individually or in the aggregate, has had, or
would reasonably be expected to have, a Material Adverse Effect on Dendreon as
of the Closing; it being understood that, for purposes of determining the
accuracy of such representations and warranties, all "Material Adverse Effect"
qualifications and other materiality qualifications, and any similar
qualifications, contained in such representations and
50
warranties shall be disregarded; and Corvas shall have received a certificate
signed on behalf of Dendreon by the chief executive officer and the chief
financial officer of Dendreon to such effect.
(b) Performance of Obligations of Dendreon, Sub and LLC. Dendreon, Sub
and LLC shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing Date,
and Corvas shall have received a certificate signed on behalf of Dendreon by the
chief executive officer and the chief financial officer of Dendreon to such
effect.
(c) Material Adverse Effect. Since the date of this Agreement, there
has not been a Material Adverse Effect on Dendreon which is continuing as of the
Closing.
(d) No Litigation. There shall not be pending any legal proceeding
brought by a Governmental Entity and related to the transactions contemplated by
this Agreement in which, in the reasonable judgment of Corvas, there is a
reasonable possibility of an outcome that would reasonably be expected to have a
Material Adverse Effect on Dendreon.
(e) Tax Opinion. Corvas shall have received a legal opinion of Cooley
Godward LLP, dated as of the Closing Date and addressed to Corvas, to the effect
that the Combination will constitute a reorganization within the meaning of
Section 368 of the Code, and if Xxxxxx Godward LLP does not render such opinion
or withdraws or modifies such opinion, this condition shall nonetheless be
deemed to be satisfied if Stoel Rives LLP renders such opinion to Corvas. In
rendering such opinions, counsel may request and rely upon customary
representations and covenants contained in certificates of officers of Dendreon,
Sub and Corvas, and Dendreon, Sub and Corvas shall provide such certificates.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01. Termination. This Agreement may be terminated at any time prior
to the Effective Time, by written notice by the terminating party to the other
party, whether before or after approval of the matters presented in connection
with the Merger by the stockholders of Corvas or Dendreon:
(a) by mutual written consent of Dendreon and Corvas; or
(b) by either Dendreon or Corvas if the Merger shall not have been
consummated by August 24, 2003 (the "Termination Date") (provided that the right
to terminate this Agreement under this Section 8.01(b) shall not be available to
a party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before such
date); or
(c) by either Dendreon or Corvas if a court of competent jurisdiction
or other Governmental Entity shall have issued a nonappealable final order,
decree, or ruling or taken any other action, in each case having the effect of
permanently restraining, enjoining, or otherwise prohibiting the Combination,
except, if the party relying on such order, decree, or
51
ruling or other action has not complied with its obligations under Section 6.07
of this Agreement; or
(d) by either Dendreon or Corvas if (i) the Corvas Stockholders'
Meeting (including any adjournments or postponements thereof) shall have been
held and completed and the Corvas' stockholders shall have taken a final vote on
a proposal to adopt this Agreement, and this Agreement shall not have been
adopted at such meeting by the Required Corvas Stockholder Vote (and shall not
have been adopted at any adjournment or postponement thereof); provided,
however, that a party shall not be permitted to terminate this Agreement
pursuant to this Section 8.01(d) if the failure to obtain the Required Corvas
Stockholder Vote is attributable to a failure on the part of such party to
perform any material obligation required to be performed by such party at or
prior to the Effective Time; or
(e) by either Dendreon or Corvas if (i) the Dendreon Stockholders'
Meeting (including any adjournments or postponements thereof) shall have been
held and completed and Dendreon's stockholders shall have taken a final vote on
the Share Issuance, and (ii) the Share Issuance shall not have been approved at
such meeting (and shall not have been approved at any adjournment or
postponement thereof) by the Required Dendreon Stockholder Vote; provided,
however, that a party shall not be permitted to terminate this Agreement
pursuant to this Section 8.01(e) if the failure to obtain the Required Dendreon
Stockholder Vote is attributable to a failure on the part of such party to
perform any material obligation required to be performed by such party at or
prior to the Effective Time; or
(f) by Dendreon (at any time prior to the adoption of this Agreement by
the Required Corvas Stockholder Vote) if a Corvas Triggering Event shall have
occurred; or
(g) by Corvas (at any time prior to the approval of the Share Issuance
by the Required Dendreon Stockholder Vote) if a Dendreon Triggering Event shall
have occurred; or
(h) by Dendreon if (i) any of Corvas' representations and warranties
contained in this Agreement shall be inaccurate as of the date of this
Agreement, or shall have become inaccurate as of a date subsequent to the date
of this Agreement (as if made on such subsequent date), such that the condition
set forth in Section 7.02(a) would not be satisfied (it being understood that,
for purposes of determining the accuracy of such representations and warranties
as of the date of this Agreement or at any subsequent date, (A) all "Material
Adverse Effect" qualifications and other materiality qualifications, and any
similar qualifications, contained in such representations and warranties shall
be disregarded and (B) any update of or modification to Corvas Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded), or (ii) any of Corvas' covenants contained in this
Agreement shall have been breached such that the condition set forth in Section
7.02(b) would not be satisfied; provided, however, that, in the case of (i) or
(ii) above, if an inaccuracy in Corvas' representations and warranties or a
breach of a covenant by Corvas is reasonably capable of being cured by Corvas
prior to the Termination Date and Corvas is continuing to exercise its
reasonable efforts to cure such inaccuracy or breach, then Dendreon may not
terminate this Agreement under this Section 8.01(h) on account of such
inaccuracy or breach until the 30th calendar day from the date on which Corvas
received a written notice of such breach from Dendreon; or
52
(i) by Corvas if (i) any of Dendreon's representations and warranties
contained in this Agreement shall be inaccurate as of the date of this
Agreement, or shall have become inaccurate as of a date subsequent to the date
of this Agreement (as if made on such subsequent date), such that the condition
set forth in Section 7.03(a) would not be satisfied (it being understood that,
for purposes of determining the accuracy of such representations and warranties
as of the date of this Agreement or at any subsequent date, (A) all "Material
Adverse Effect" qualifications and other materiality qualifications, and any
similar qualifications, contained in such representations and warranties shall
be disregarded and (B) any update of or modification to the Dendreon Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded), or (ii) any of Dendreon's covenants contained in this
Agreement shall have been breached such that the condition set forth in Section
7.03(b) would not be satisfied; provided, however, that, in the case of (i) or
(ii) above, if an inaccuracy in Dendreon's representations and warranties or a
breach of a covenant by Dendreon is reasonably capable of being cured by
Dendreon prior to the Termination Date and Dendreon is continuing to exercise
its reasonable efforts to cure such inaccuracy or breach, then Corvas may not
terminate this Agreement under this Section 8.01(i) on account of such
inaccuracy or breach until the 30th calendar day form the date on which Dendreon
received a written notice of such breach from Corvas.
(j) by Corvas at any time prior to the Corvas Stockholders' Meeting if
as a result of a Corvas Superior Offer, the board of directors of Corvas
(including through a special committee or otherwise) shall have determined in
good faith, after considering the advice of its outside legal counsel, that the
failure to accept such Corvas Superior Offer would reasonably be expected to
result in a breach of the fiduciary duties of the Board of Directors to Corvas'
stockholders under applicable law.
8.02. Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.01, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Dendreon,
Corvas, Sub or their respective officers, directors, stockholders, or
Affiliates, except as set forth in Section 8.03; provided that (i) the
provisions of Section 8.03 of this Agreement shall remain in full force and
effect and survive any termination of this Agreement and (ii) the termination of
this Agreement shall not relieve any party from any liability or damages for any
willful breach of any provision contained in this Agreement.
8.03. Fees and Expenses.
(a) Except as set forth in this Section 8.03, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided, however, that Dendreon and Corvas shall share
equally all fees and expenses, other than attorneys' fees, incurred in relation
to the printing and filing of the Joint Proxy Statement (including any related
preliminary materials) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements.
(b) If (A) (1) this Agreement is terminated by Dendreon or Corvas
pursuant to Section 8.01(d), (2) at or prior to the time of such termination a
Corvas Acquisition Proposal shall have been publicly disclosed, announced or
commenced, (3) such Corvas Acquisition Proposal shall
53
not have been unconditionally and publicly withdrawn by the Person making such
Corvas Acquisition Proposal at least five (5) business days prior to the date of
the Corvas Stockholders' Meeting, and (4) within nine months after such
termination Corvas consummates a Corvas Acquisition Transaction, or (B) this
Agreement is terminated by Dendreon pursuant to Section 8.01(f) of (C) this
Agreement is terminated by Corvas pursuant to Section 8.01(j), then, in any such
case, Corvas shall pay to Dendreon, in cash at the time specified in the next
sentence, a nonrefundable fee in the amount of $2,187,000. In the case of
termination of this Agreement (i) by Corvas or Dendreon pursuant to Section
8.01(d) (and the conditions set forth in clauses (A)(1) through (A)(4) of the
preceding sentence are satisfied), then the fee referred to in the preceding
sentence shall be paid by Corvas within two business days after the consummation
of such Corvas Acquisition Transaction, or (ii) by Corvas pursuant to Section
8.01(j), then the fee referred to in the preceding sentence shall be paid by
Corvas within two business days after such termination, or (iii) by Dendreon
pursuant to Section 8.01(f), then the fee referred to in the preceding sentence
shall be paid by Corvas within two business days after such termination.
(c) If (A) (1) this Agreement is terminated by Dendreon or Corvas
pursuant to Section 8.01(e), (2) at or prior to the time of such termination a
Dendreon Acquisition Proposal shall have been publicly disclosed, announced or
commenced, (3) such Dendreon Acquisition Proposal shall not have been
unconditionally and publicly withdrawn by the Person making such Dendreon
Acquisition Proposal at least five (5) business days prior to the date of the
Dendreon Stockholders' Meeting, and (4) within nine months after such
termination Dendreon consummates a Dendreon Acquisition Transaction, or (B) this
Agreement is terminated by Corvas pursuant to Section 8.01(g), then Dendreon
shall pay to Corvas, in cash at the time specified in the next sentence, a
nonrefundable fee in the amount of $2,187,000. In the case of termination of
this Agreement (i) by Corvas or Dendreon pursuant to Section 8.01(e) (and the
conditions set forth in clauses (A)(1) through (A)(4) of the preceding sentence
are satisfied), then the fee referred to in the preceding sentence shall be paid
by Dendreon within two business days after the consummation of such Dendreon
Acquisition Transaction or (ii) by Corvas pursuant to Section 8.01(g), then the
fee referred to in the preceding sentence shall be paid by Dendreon within two
business days after such termination.
(d) Corvas acknowledges that the agreements contained in this Section
8.03 are an integral part of the transaction contemplated by this Agreement, and
that, without these agreements, Dendreon would not enter into this Agreement;
accordingly, if Corvas fails to pay in a timely manner the amounts due pursuant
to this Section 8.03 and, in order to obtain such payment, Dendreon makes a
claim that results in a judgment against Corvas for the amounts set forth in
this Section 8.03, Corvas shall pay to Dendreon interest on the amounts set
forth in this Section 8.03 at the prime rate of Citibank, N.A. in effect on the
date such payment was required to be made.
(e) Dendreon acknowledges that the agreements contained in this Section
8.03 are an integral part of the transaction contemplated by this Agreement, and
that, without these agreements, Corvas would not enter into this Agreement;
accordingly, if Dendreon fails to pay in a timely manner the amounts due
pursuant to this Section 8.03 and, in order to obtain such payment, Corvas makes
a claim that results in a judgment against Dendreon for the amounts set forth in
this
54
Section 8.03, Dendreon shall pay to Corvas interest on the amounts set forth in
this Section 8.03 at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.
(f) Payment of the fees and interest described in this Section 8.3
shall not be in lieu of damages incurred in the event of willful breach of this
Agreement.
8.04. Amendment. This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of Corvas or of Dendreon, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.05. Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement of a
party hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
9.01. Nonsurvival of Representations, Warranties, and Agreements. None
of the representations, warranties, and agreements of the parties in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Sections
1.03, 1.04, 2.01, 2.02, 6.12, 6.13, 6.16, 6.20, 6.21 and this Article IX. Each
of (i) the Nondisclosure Agreement and (ii) the Mutual Exclusivity and
Standstill Agreement, dated as of February 14, 2003, between Corvas and Dendreon
(the "Standstill Agreement") shall survive the execution and delivery of this
Agreement.
9.02. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed), or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Dendreon, Sub or LLC, to:
Dendreon Corporation
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chairman
with a required copy to (which alone shall not constitute
notice):
55
Stoel Rives LLP
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: L. Xxxx Xxxxxxxxx, Jr.
(i) if to Corvas, to:
Corvas International, Inc
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chairman
with a required copy to (which alone shall not constitute
notice):
Xxxxxx Godward LLP
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Xxxx X. Xxxxxxx, Esq.
9.03. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes," or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement," "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to the
date set forth in the first paragraph of this Agreement.
9.04. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.05. Entire Agreement, No Third Party Beneficiaries. This Agreement
(including the documents and the instruments referred to herein), the
Nondisclosure Agreement and the Standstill Agreement (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as specifically provided herein are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
9.06. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ANY
APPLICABLE CONFLICTS OF LAW. In the event of any
56
claim being made under this Agreement, the parties agree that, in no event shall
punitive or exemplary damages or attorney's fees ( except as provided in
Sections 8.03(d) or (e) with respect to attorney's fees) be awardable and hereby
agree not to assert and hereby waive any and all right to claim such damages or
awards.
9.07. 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 parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by the parties
and their respective successors and assigns.
9.08. Definitions. For purposes of this Agreement, the following terms
shall have the respective meaning set forth below:
"Corvas Acquisition Proposal" shall mean any offer, proposal, inquiry
or indication of interest (other than an offer, proposal, inquiry or indication
of interest by Dendreon) contemplating or otherwise relating to any Corvas
Acquisition Transaction.
"Corvas Acquisition Transaction" shall mean any transaction or series
of transactions involving: (i) any merger, consolidation, share exchange,
business combination, issuance of securities, direct or indirect acquisition of
securities, tender offer, exchange offer or other similar transaction in which
(1) Corvas is a constituent corporation, (2) a Person or "group" (as defined in
the Exchange Act and the rules promulgated thereunder) of Persons directly or
indirectly acquires beneficial or record ownership of securities representing
more than 20% of the outstanding securities of any class of voting securities of
Corvas, or (3) Corvas issues securities representing more than 20% of the
outstanding securities of any class of voting securities of Corvas; (ii) any
direct or indirect sale, lease, exchange, transfer, license, acquisition or
disposition of any business or businesses or of assets or rights that constitute
or account for 20% or more of the consolidated net revenues, net income or
assets of Corvas; or (iii) any liquidation or dissolution of Corvas.
"Corvas Intellectual Property Assets" means all Intellectual Property
Assets owned by Corvas, used in the business of Corvas as it is presently or
presently proposed to be conducted or otherwise necessary for the development,
manufacture, sale or distribution of the Corvas Products in the jurisdictions in
which Corvas is presently selling or distributing, or contemplating selling or
distributing, the Corvas Products. "Corvas Intellectual Property Assets"
includes, without limitation, the Corvas Products.
"Corvas Nondisclosure Contracts" means all nondisclosure or
confidentiality agreements entered into between Corvas and any Person in
connection with disclosures by Corvas relating to the Corvas Products or the
other Corvas Intellectual Property Assets.
"Corvas Products" means any product being designed, developed, tested,
manufactured, marketed, sold or distributed by Corvas.
"Corvas Superior Offer" shall mean an unsolicited, bona fide written
offer made by a third party (other than Dendreon) for a merger, consolidation,
business combination, sale of substantial assets, sale of shares of capital
stock (including without limitation by way of a tender
57
offer) or similar transaction on terms that the Board of Directors of Corvas
determines, in its reasonable judgment, after consultation with an independent
financial advisor of national reputation, to be more favorable to Corvas'
stockholders than the terms of the Merger; provided, however, that any such
offer shall not be deemed to be a "Corvas Superior Offer" if any financing
required to consummate the transaction contemplated by such offer is not
committed or is not reasonably capable of being obtained by such third party on
a timely basis.
"Corvas Triggering Event" shall be deemed to have occurred if: (i) the
Board of Directors of Corvas shall have failed to unanimously recommend that
Corvas' stockholders vote to adopt this Agreement, or shall for any reason have
withdrawn or shall have modified in a manner adverse to Dendreon the Corvas
Board Recommendation; it being expressly understood that if the Corvas Board
Recommendation is no longer unanimous it shall be deemed modified in a manner
adverse to Dendreon, (ii) Corvas shall have failed to include in the Joint Proxy
Statement the Corvas Board Recommendation, (iii) the Board of Directors of
Corvas fails to unanimously reaffirm the Corvas Board Recommendation, or fails
to unanimously reaffirm its determination that the this Agreement and the
Combination is in the best interests of Corvas' stockholders, within five
business days after Dendreon requests in writing that such recommendation or
determination be reaffirmed; (iv) the Board of Directors of Corvas shall have
approved, endorsed or recommended any Corvas Acquisition Proposal; (v) Corvas
shall have entered into any letter of intent or similar document or any contract
relating to any Corvas Acquisition Proposal; (vi) Corvas shall have failed to
hold the Corvas Stockholders' Meeting within 45 days after the Registration
Statement is declared effective under the Securities Act; (vii) a tender or
exchange offer relating to securities of Corvas shall have been commenced and
Corvas shall not have sent to its securityholders, within ten business days
after the commencement of such tender or exchange offer, a statement disclosing
that Corvas recommends rejection of such tender or exchange offer, it being
understood that taking no position or indicating its inability to take a
position does not constitute recommending a rejection of such tender or exchange
offer; or (viii) a Corvas Acquisition Proposal is publicly announced, and Corvas
(A) fails to issue a press release announcing its opposition to such Corvas
Acquisition Proposal within five business days after such Corvas Acquisition
Proposal is announced or (B) otherwise fails to actively oppose such Corvas
Acquisition Proposal.
"Dendreon Acquisition Proposal" shall mean any offer, proposal, inquiry
or indication of interest (other than an offer, proposal, inquiry or indication
of interest by Corvas) contemplating or otherwise relating to any Dendreon
Acquisition Transaction.
"Dendreon Acquisition Transaction" shall mean any transaction or series
of transactions involving: (i) any merger, consolidation, share exchange,
business combination, issuance of securities, direct or indirect acquisition of
securities, tender offer, exchange offer or other similar transaction in which
(1) Dendreon is a constituent corporation, (2) a Person or "group" (as defined
in the Exchange Act and the rules promulgated thereunder) of Persons directly or
indirectly acquires beneficial or record ownership of securities representing
more than 20% of the outstanding securities of any class of voting securities of
Dendreon, or (3) Dendreon issues securities representing more than 20% of the
outstanding securities of any class of voting securities of Dendreon; (ii) any
direct or indirect sale, lease, exchange, transfer, license, acquisition or
disposition of any business or businesses or of assets or rights that constitute
or
58
account for 20% or more of the consolidated net revenues, net income or assets
of Dendreon; or (iii) any liquidation or dissolution of Dendreon.
"Dendreon Intellectual Property Assets" means all Intellectual Property
Assets owned by Dendreon, used in the business of Dendreon as it is presently or
presently proposed to be conducted or otherwise necessary for the development,
manufacture, sale or distribution of the Dendreon Products in the jurisdictions
in which Dendreon is presently selling or distributing, or contemplating selling
or distributing, the Dendreon Products. "Dendreon Intellectual Property Assets"
includes, without limitation, the Dendreon Products.
"Dendreon Nondisclosure Contracts" means all nondisclosure or
confidentiality agreements entered into between Dendreon and any Person in
connection with disclosures by Dendreon relating to the Dendreon Products or the
other Dendreon Intellectual Property Assets.
"Dendreon Products" means any product being designed, developed,
tested, manufactured, marketed, sold or distributed by Dendreon.
"Dendreon Superior Offer" shall mean an unsolicited, bona fide written
offer made by a third party (other than Corvas) for a merger, consolidation,
business combination, sale of substantial assets, sale of shares of capital
stock (including without limitation by way of a tender offer) or similar
transaction on terms that the Board of Directors of Dendreon determines, in its
reasonable judgment, after consultation with an independent financial advisor of
national reputation, to be more favorable to Dendreon's stockholders than the
terms of the Merger; provided, however, that any such offer shall not be deemed
to be a "Dendreon Superior Offer" if any financing required to consummate the
transaction contemplated by such offer is not committed or is not reasonably
capable of being obtained by such third party on a timely basis.
"Dendreon Triggering Event" shall be deemed to have occurred if: (i)
the Board of Directors of Dendreon shall have failed to unanimously recommend
that Dendreon's stockholders vote to approve the Share Issuance, or shall for
any reason have withdrawn or shall have modified in a manner adverse to Corvas
the Dendreon Board Recommendation; it being expressly understood that if the
Dendreon Board Recommendation is no longer unanimous it shall be deemed modified
in a manner adverse to Corvas, (ii) Dendreon shall have failed to include in the
Joint Proxy Statement the Dendreon Board Recommendation, (iii) the Board of
Directors of Dendreon fails to unanimously reaffirm the Dendreon Board
Recommendation, or fails to unanimously reaffirm its determination that the
Share Issuance is in the best interests of Dendreon's stockholders, within five
business days after Corvas requests in writing that such recommendation or
determination be reaffirmed; (iv) the Board of Directors of Dendreon shall have
approved, endorsed or recommended any Dendreon Acquisition Proposal; (v)
Dendreon shall have entered into any letter of intent or similar document or any
contract relating to any Dendreon Acquisition Proposal; (vi) Dendreon shall have
failed to hold the Dendreon Stockholders' Meeting within 45 days after the
Registration Statement is declared effective under the Securities Act; (vii) a
tender or exchange offer relating to securities of Dendreon shall have been
commenced and Dendreon shall not have sent to its securityholders, within ten
business days after the commencement of such tender or exchange offer, a
statement disclosing that Dendreon recommends rejection of such tender or
exchange offer, it being understood that taking no position or indicating its
inability to take a position does not constitute recommending
59
a rejection of such tender or exchange offer; or (viii) a Dendreon Acquisition
Proposal is publicly announced, and Dendreon (A) fails to issue a press release
announcing its opposition to such Dendreon Acquisition Proposal within five
business days after such Dendreon Acquisition Proposal is announced or (B)
otherwise fails to actively oppose such Dendreon Acquisition Proposal.
"Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
"Intellectual Property Assets" means: (A) patents, patent applications,
patent rights, and inventions and discoveries and invention disclosures (whether
or not patented) (collectively, "Patents"); (B) all trade names, trade dress,
logos, packaging design, slogans, Internet domain names, registered and
unregistered trademarks and service marks and applications therefor
(collectively, "Marks"); (C) copyrights in both published and unpublished works,
including without limitation all compilations, databases and computer programs,
and all copyright registrations and applications, and all derivatives,
translations, adaptations and combinations of the above (collectively,
"Copyrights"); (D) know-how, trade secrets, confidential or proprietary
information, research in progress, algorithms, data, designs, processes,
formulae, drawings, schematics, blueprints, flow charts, models, prototypes,
techniques, beta testing procedures and beta testing results (collectively,
"Trade Secrets"); (E) goodwill, franchises, licenses, technical information and
claims of infringement against third parties; and (F) customer lists and
telephone numbers and business strategies.
"knowledge of a corporation" shall mean knowledge of any one or more of
its executive officers.
"Material Adverse Effect." An event, violation, inaccuracy,
circumstance or other matter will be deemed to have a "Material Adverse Effect"
on Corvas if such event, violation, inaccuracy, circumstance or other matter has
had or would reasonably be expected to have or give rise to a material adverse
effect on (i) the business, condition, capitalization, assets, liabilities,
operations or financial performance of Corvas, (ii) the prospects of Corvas'
lead drug candidate, (iii) the ability of Corvas to consummate the Merger or any
of the other transactions contemplated by this Agreement or to perform any of
its obligations under this Agreement prior to the Termination Date, or (iv)
Dendreon's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Continuing
Corporation; provided however, that in no event shall any of the following, in
and of themselves, constitute a Material Adverse Effect on Corvas: (A) any
change in the business, condition, capitalization, assets, liabilities,
operations or financial performance of Corvas caused by, related to or resulting
from, directly or indirectly, the transactions contemplated by this Agreement or
the announcement thereof, (B) any failure by Corvas to meet internal projections
or forecasts or published revenue or earnings predictions for any period ending
(or which revenues or earnings are released), (C) any adverse change, effect or
occurrence attributable to the U.S. economy as a whole, the industries in which
Corvas competes or the foreign economies in any Non-U.S. locations where Corvas
has material operations or sales, (D) any act or threat of terrorism or war
anywhere in the world, any armed hostilities or terrorist activities anywhere in
the world, any
60
threat or escalation of armed hostilities or terrorist activities anywhere in
the world or any governmental or other response or reaction to any of the
foregoing, or (E) any change in accounting requirements or principles or any
change in applicable laws, rules or regulations or the interpretation thereof.
An event, violation, inaccuracy, circumstance or other matter will be deemed to
have a "Material Adverse Effect" on Dendreon if such event, violation,
inaccuracy, circumstance or other matter has had or would reasonably be expected
to have or give rise to a material adverse effect on (i) the business,
condition, capitalization, assets, liabilities, operations or financial
performance of Dendreon, (ii) the prospects of Dendreon's lead drug candidate,
or (iii) the ability of Dendreon to consummate the Merger or any of the other
transactions contemplated by this Agreement or to perform any of its obligations
under this Agreement prior to the Termination Date; provided however, that in no
event shall any of the following, in and of themselves, constitute a Material
Adverse Effect on Dendreon: (A) any change in the business, condition,
capitalization, assets, liabilities, operations or financial performance of
Dendreon and its Subsidiaries taken as a whole caused by, related to or
resulting from, directly or indirectly, the transactions contemplated by this
Agreement or the announcement thereof, (B) any failure by Dendreon to meet
internal projections or forecasts or published revenue or earnings predictions
for any period ending (or which revenues or earnings are released), (C) any
adverse change, effect or occurrence attributable to the U.S. economy as a
whole, the industries in which Dendreon competes or the foreign economies in any
Non-U.S. locations where Dendreon has material operations or sales, (D) any act
or threat of terrorism or war anywhere in the world, any armed hostilities or
terrorist activities anywhere in the world, any threat or escalation of armed
hostilities or terrorist activities anywhere in the world or any governmental or
other response or reaction to any of the foregoing, or (E) any change in
accounting requirements or principles or any change in applicable laws, rules or
regulations or the interpretation thereof.
"Nondisclosure Agreement" shall mean the Mutual Nondisclosure Agreement
dated February 11, 2003 between Dendreon and Corvas.
"Person" shall mean any individual, Entity or Governmental Entity.
"Representative" shall mean any party's respective directors, officers,
employees, agents, representatives, consultants, accountants, attorneys and
advisors of such party and its affiliates.
61
IN WITNESS WHEREOF, Dendreon, Sub, LLC and Corvas have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
DENDREON CORPORATION
By:_____________________________
Its:_____________________
SEAHAWK ACQUISITION, INC.
By:_____________________________
Its:_____________________
CHARGER PROJECT LLC
By:_____________________________
Its:_____________________
CORVAS INTERNATIONAL, INC.
By:_____________________________
Its:_____________________
62
