Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
GENZYME CORPORATION, GLBC CORP., GLBC LLC AND
ILEX ONCOLOGY, INC.
-----------------------------
Dated as of February 26, 2004
-----------------------------
TABLE OF CONTENTS
PAGE
SECTION 1 - THE MERGERS....................................................................................1
1.1 The Mergers....................................................................................1
1.2 Effective Time.................................................................................2
1.3 Closing........................................................................................3
1.4 Directors and Officers of the First Surviving Entity...........................................3
1.5 Effects of the Mergers.........................................................................3
1.6 Conversion of Common Stock.....................................................................3
1.7 Company Options and Purchase Rights............................................................4
1.8 Closing of Company Transfer Books..............................................................5
1.9 Exchange of Certificates.......................................................................5
1.10 No Liability...................................................................................6
1.11 Lost Certificates..............................................................................6
1.12 Withholding Rights.............................................................................6
1.13 Distributions with Respect to Unexchanged Shares...............................................6
1.14 Additional Matters.............................................................................7
1.15 Conversion of Shares in Second Merger..........................................................7
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF COMPANY......................................................7
2.1 Organization and Qualification.................................................................7
2.2 Authority to Execute and Perform Agreement.....................................................8
2.3 Capitalization and Title to Shares.............................................................8
2.4 Company Subsidiaries..........................................................................10
2.5 SEC Reports...................................................................................10
2.6 Financial Statements..........................................................................11
2.7 Absence of Undisclosed Liabilities............................................................11
2.8 Absence of Adverse Changes....................................................................11
2.9 Compliance with Laws..........................................................................12
2.10 Actions and Proceedings.......................................................................13
2.11 Contracts and Other Agreements................................................................14
2.12 Property......................................................................................16
2.13 Insurance.....................................................................................17
2.14 Commercial Relationships......................................................................18
2.15 Tax Matters...................................................................................18
-i-
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.16 Employee Benefit Plans........................................................................20
2.17 Employee Relations............................................................................22
2.18 Environmental Matters.........................................................................23
2.19 No Breach.....................................................................................25
2.20 Board Approvals...............................................................................26
2.21 Financial Advisor.............................................................................26
2.22 Proxy Statement and Registration Statement....................................................26
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF PARENT......................................................27
3.1 Organization and Qualification................................................................27
3.2 Authority to Execute and Perform Agreement....................................................27
3.3 Capitalization................................................................................27
3.4 SEC Reports...................................................................................28
3.5 Financial Statements..........................................................................28
3.6 Absence of Undisclosed Liabilities............................................................28
3.7 Absence of Adverse Changes....................................................................29
3.8 Actions and Proceedings.......................................................................29
3.9 Intellectual Property.........................................................................29
3.10 No Breach.....................................................................................29
3.11 Proxy Statement and Registration Statement....................................................29
3.12 LLC...........................................................................................30
3.13 Sub...........................................................................................30
SECTION 4 - COVENANTS AND AGREEMENTS.....................................................................30
4.1 Conduct of Business...........................................................................30
4.2 Corporate Examinations and Investigations.....................................................33
4.3 Expenses......................................................................................34
4.4 Authorization from Others.....................................................................34
4.5 Further Assurances............................................................................34
4.6 Preparation of Disclosure Documents...........................................................35
4.7 Public Announcements..........................................................................36
4.8 Affiliate Letters.............................................................................36
-ii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
4.9 Nasdaq Listings...............................................................................36
4.10 No Solicitation...............................................................................36
4.11 Regulatory Filings............................................................................37
4.12 Notification of Certain Matters...............................................................38
4.13 Registration of Certain Shares................................................................38
4.14 Employee Matters..............................................................................38
4.15 Indemnification...............................................................................39
4.16 Section 16 Approval...........................................................................39
4.17 Participation in Certain Actions and Proceedings..............................................39
4.18 Tax Elections and Reporting...................................................................40
SECTION 5 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY TO CONSUMMATE THE MERGERS...............40
5.1 Stockholder Approval..........................................................................40
5.2 Registration Statement........................................................................40
5.3 Absence of Order..............................................................................40
5.4 Regulatory Approvals..........................................................................40
5.5 HSR Act.......................................................................................40
5.6 Nasdaq........................................................................................40
SECTION 6 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT, LLC AND SUB TO CONSUMMATE THE MERGERS......41
6.1 Representations, Warranties and Covenants.....................................................41
6.2 Corporate Certificates........................................................................41
6.3 Secretary's Certificate.......................................................................41
6.4 Affiliate Letters.............................................................................41
6.5 Tax Opinion...................................................................................41
6.6 Consents......................................................................................41
6.7 FIRPTA Certificate............................................................................42
6.8 Pending Litigation............................................................................42
SECTION 7 - CONDITIONS PRECEDENT TO THE OBLIGATION OF COMPANY TO CONSUMMATE THE MERGERS..................42
7.1 Representations, Warranties and Covenants.....................................................42
-iii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
7.2 Tax Opinion...................................................................................42
7.3 Merger Documents..............................................................................42
SECTION 8 - TERMINATION, AMENDMENT AND WAIVER............................................................42
8.1 Termination...................................................................................42
8.2 Effect of Termination.........................................................................44
8.3 Termination Fee...............................................................................44
8.4 Amendment.....................................................................................45
8.5 Waiver........................................................................................45
SECTION 9 - MISCELLANEOUS................................................................................45
9.1 No Survival...................................................................................45
9.2 Notices.......................................................................................45
9.3 Entire Agreement..............................................................................46
9.4 Governing Law.................................................................................46
9.5 Binding Effect; No Assignment; No Third-Party Beneficiaries...................................47
9.6 Section Headings..............................................................................47
9.7 Counterparts..................................................................................47
9.8 Severability..................................................................................47
9.9 Submission to Jurisdiction; Waiver............................................................47
9.10 Enforcement...................................................................................47
9.11 Rules of Construction.........................................................................48
9.12 Waiver of Jury Trial..........................................................................48
-iv-
EXHIBITS
Exhibit A Form of First Certificate of Merger
Exhibit B Form of Second Certificate of Merger
Exhibit C Form of Affiliate Letter
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of February
26, 2004 is among
Genzyme Corporation ("Parent"), a Massachusetts corporation,
GLBC Corp. ("Sub"), a newly-formed
Delaware corporation and a direct
wholly-owned subsidiary of Parent, GLBC LLC ("LLC"), a newly formed
Delaware
limited liability company and a direct wholly-owned subsidiary of Parent, and
ILEX Oncology, Inc. ("Company"), a
Delaware corporation. The parties wish to
effect a strategic business combination.
R E C I T A L S
A. For United States Federal income tax purposes, it is intended that
the Mergers (as defined in Section 1.1(b)) will qualify as a single
reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that this Agreement constitutes a
plan of reorganization within the meaning of Section 1.368-2(g) of the income
tax regulations promulgated under the Code. For financial accounting purposes,
it is intended that the First Merger (as defined in Section 1.1(a)) will be
accounted for using the purchase method of accounting.
B. For purposes of this Agreement, "Parent Common Stock" shall mean
Genzyme General Division Common Stock, $0.01 par value per share, of Parent as
such series may be redesignated or undesignated, together with an associated GGD
Stock Purchase Right, as such rights may be redesignated, under Parent's Amended
and Restated Renewed Rights Agreement, as amended ("Parent's Rights Plan").
In consideration of the mutual representations, warranties and
covenants contained herein, the parties hereto agree as follows:
SECTION 1 - THE MERGERS
1.1 THE MERGERS.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.2), Company and Sub shall consummate a
merger (the "First Merger") pursuant to which (i) Sub shall be merged with and
into Company and the separate corporate existence of Sub shall thereupon cease,
(ii) Company shall be the successor or surviving entity in the First Merger
(sometimes referred to herein as the "First Surviving Entity") and shall
continue to be governed by the laws of the State of
Delaware and (iii) the
separate corporate existence of Company, with all its rights, privileges,
immunities, powers and franchises, shall continue unaffected by the First
Merger. The First Surviving Entity shall be a direct wholly-owned subsidiary of
Parent and shall succeed to and assume all the rights and obligations of Sub and
Company in accordance with the
Delaware General Corporation Law (the "DGCL").
(b) Subject to the terms and conditions of this Agreement, promptly
after, and conditioned upon the occurrence of, the Effective Time, and in any
event by 11:59 p.m. on the
date on which the Effective Time occurs, Company and LLC shall consummate a
merger (the "Second Merger" and, together with the First Merger, the "Mergers")
pursuant to which (i) Company shall be merged with and into LLC and the separate
corporate existence of Company shall thereupon cease, (ii) LLC shall be the
successor or surviving entity in the Second Merger (sometimes referred to herein
as the "Second Surviving Entity") and shall continue to be governed by the laws
of the State of
Delaware and (iii) the separate existence of LLC, with all its
rights, privileges, immunities, powers and franchises, shall continue unaffected
by the Second Merger. The Second Surviving Entity shall succeed to and assume
all the rights and obligations of LLC and Company in accordance with the DGCL
and
Delaware Limited Liability Company Act (the "DLLCA").
(c) Pursuant to the First Merger, (i) the Certificate of
Incorporation of Company, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the First Surviving Entity until
the earlier of (A) amendment as provided by law and such Certificate of
Incorporation or (B) the Second Merger, and (ii) the By-laws of Company, as in
effect immediately prior to the Effective Time, shall be the By-laws of the
First Surviving Entity until the earlier of (A) amendment as provided by law,
such Certificate of Incorporation and such By-laws or (B) the Second Merger.
(d) Pursuant to the Second Merger, the Limited Liability Company
Agreement of LLC, as in effect immediately prior to the effective time of the
Second Merger, shall be the Limited Liability Company Agreement of the Second
Surviving Entity until thereafter amended as provided by law and such Limited
Liability Company Agreement. The Second Merger shall have the effects set forth
in the DGCL and the DLLCA.
1.2 EFFECTIVE TIME.
(a) Parent, Sub and Company shall cause a certificate of merger with
respect to the First Merger (the "First Certificate of Merger") in the form of
Exhibit A to be filed on the Closing Date (as defined in Section 1.3), or on
such other date as Parent and Company may agree, with the Secretary of State of
the State of
Delaware (the "Secretary of State") as provided in the DGCL. The
First Merger shall become effective on the date on which the Certificate of
Merger pursuant to Section 251 of the DGCL and any other documents necessary to
effect the First Merger in accordance with the DGCL are duly filed with the
Secretary of State (the "First Merger Filing") or such other time as is
specified in the First Certificate of Merger, and such time is hereinafter
referred to as the "Effective Time."
(b) Parent, LLC and Company shall cause a certificate of merger with
respect to the Second Merger (the "Second Certificate of Merger") in the form of
Exhibit B, to be filed on the Closing Date, or on such other date as Parent and
Company may agree, with the Secretary of State as provided in the DGCL and the
DLLCA. The Second Merger shall become effective on the date on which the Second
Certificate of Merger pursuant to Section 264 of the DGCL and Section 18-209 of
the DLLCA and any other documents necessary to effect the Second Merger in
accordance with the DGCL and the DLLCA are duly filed with the Secretary of
State (the "Second Merger Filing" and, together with the First Merger Filing,
the "Merger Filings") or such other time as is specified in the Second
Certificate of Merger.
2
1.3 CLOSING. The closing of the Mergers (the "Closing") shall take place
at 9:00 a.m., Eastern time, on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Sections 5, 6 and 7 that are susceptible to
satisfaction prior to the Closing (the "Closing Date"), at the offices of Ropes
& Xxxx LLP, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or such other
date or place as agreed to in writing by the parties hereto.
1.4 DIRECTORS AND OFFICERS OF THE FIRST SURVIVING ENTITY. The directors
and officers of Company at the Effective Time shall, from and after the
Effective Time and prior to the effective time of the Second Merger, be the
directors and officers, respectively, of the First Surviving Entity, until their
successors shall have been duly elected or appointed or qualified or until their
earlier death, resignation or removal in accordance with the First Surviving
Entity's Certificate of Incorporation and By-laws.
1.5 EFFECTS OF THE MERGERS.
(a) At and after the Effective Time, the First Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of Company and Sub shall be vested in the First Surviving
Entity, and all debts, liabilities and duties of Company and Sub shall become
the debts, liabilities and duties of the First Surviving Entity.
(b) At and after the effective time of the Second Merger, the Second
Merger shall have the effects set forth in the DGCL and the DLLCA. Without
limiting the generality of the foregoing, and subject thereto, at such effective
time of the Second Merger all the property, rights, privileges, powers and
franchises of the First Surviving Entity and LLC shall be vested in the Second
Surviving Entity, and all debts, liabilities and duties of the First Surviving
Entity and LLC shall become the debts, liabilities and duties of the Second
Surviving Entity.
1.6 CONVERSION OF COMMON STOCK.
(a) MERGER CONSIDERATION IN THE FIRST MERGER. At the Effective Time,
by virtue of the First Merger and without any action on the part of Parent, Sub
or Company:
(i) Subject to payment of cash in lieu of fractional shares
as provided below, each share of Company common stock, $0.01 par value per share
(together with the associated rights (the "Rights") under the Company Rights
Plan (as defined in Section 2.20(c)) "Company Common Stock") outstanding
immediately prior to the Effective Time, other than shares held by Company as
treasury stock and shares held by Parent or Sub, shall be cancelled and
extinguished and automatically converted into and become the right to receive a
fraction of a share of Parent Common Stock equal to the Exchange Ratio (the "Per
Share Stock Consideration"). The "Exchange Ratio" shall equal $26.00 divided by
the Parent Share Price and rounded to four decimal places; provided however,
that if the Parent Share Price is greater than $59.88, then the Exchange Ratio
shall equal 0.4342 and if the Parent Share Price is less than $46.58, then the
Exchange Ratio shall equal 0.5582. The "Parent Share Price" shall mean the
average (rounded to the nearest cent) of the per share closing prices of Parent
Common Stock as reported by the NASDAQ National Market for the twenty trading
days ending on the fifth trading day prior to the Closing Date.
3
(ii) If prior to the Effective Time there is a change in the
number of issued and outstanding shares of Parent Common Stock as the result of
reclassification, subdivision, recapitalization, stock split (including reverse
stock split) or stock dividend, the Exchange Ratio shall be equitably adjusted
to give effect to such event. If prior to the Effective Time there is a change
in the number of issued and outstanding shares of Company Common Stock as the
result of reclassification, subdivision, recapitalization, stock split
(including reverse stock split) or stock dividend, the Exchange Ratio shall be
equitably adjusted to give effect to such event.
(iii) The shares of Parent Common Stock payable pursuant to
this Section 1.6(a), together with cash payments in lieu of fractional shares
pursuant to Section 1.6(b), are referred to collectively as the "Merger
Consideration."
(b) NO FRACTIONAL SHARES. No fractional shares of Parent Common
Stock shall be issued pursuant to this Agreement. In lieu of fractional shares,
each stockholder who would otherwise have been entitled to a fraction of a share
of Parent Common Stock hereunder (after aggregating all fractional shares to be
received by such stockholder), shall receive, without interest, an amount in
cash (rounded to the nearest whole cent) determined by multiplying such fraction
by the last sale price of a share of Parent Common Stock as reported by the
NASDAQ National Market on the date during which the Effective Time occurs.
(c) CANCELLED STOCK. All shares of Company Common Stock (and the
associated Rights) held at the Effective Time by Company as treasury stock or by
Parent or Sub shall be cancelled and extinguished and no payment shall be made
with respect thereto.
(d) SUB STOCK. In the First Merger, 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 of the First Surviving Entity.
1.7 COMPANY OPTIONS AND PURCHASE RIGHTS.
(a) At the Effective Time, each outstanding option to purchase
shares of Company Common Stock (the "Company Options") granted under Company's
1995 Stock Option Plan, Second Amended and Restated 1996 Non-Employee Director
Stock Option Plan, 2000 Employee Stock Compensation Plan, Non-Employee Director
Stock Option Agreements listed on Section 1.7(a) of the Company Disclosure
Schedule (as defined in Section 2), and 2001 UK Employee Stock Compensation Plan
(the "Company Stock Option Plans") shall be assumed by Parent. Each Company
Option so assumed by Parent under this Agreement shall continue to have, and be
subject to, the same terms and conditions set forth in the applicable Company
Stock Option Plan or in the applicable stock option agreement or certificate
immediately prior to the Effective Time (including, without limitation, any
repurchase rights), except (i) that each Company Option shall be exercisable (or
shall become exercisable in accordance with its terms) for that number of shares
of Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such Company Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, rounded down to
the nearest whole number of shares of Parent Common Stock, (ii) that the per
share exercise price for the shares of Parent Common Stock issuable upon
exercise of such assumed Company Option shall be equal to the quotient
determined by dividing the exercise price per share of
4
Company Common Stock at which such Company Option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent and (iii) for the vesting of such options may have been accelerated
as indicated on Section 2.3(b) of the Company Disclosure Schedule. After the
Effective Time, Parent shall issue to each holder of an outstanding Company
Option a notice describing the foregoing assumption of such Company Options by
Parent. The adjustments provided herein with respect to any Company Options that
are "incentive stock options" as defined in Section 422 of the Code shall be and
are intended to be effected in a manner which is consistent with Section 424(a)
of the Code so as to preserve the benefits of such "incentive stock options."
(b) Company shall amend its 2000 Employee Stock Purchase Plan, as
amended (the "Company Purchase Plan") so that as of the Closing Date (i) the
Company Purchase Plan is terminated, (ii) no further contributions, through
payroll deductions or otherwise, will be made under the Company Purchase Plan,
and (iii) there will be no outstanding rights of participants under the Company
Purchase Plan. Prior to the Closing Date, Company will take all actions
(including, if appropriate, amending the terms of the Company Purchase Plan)
that are necessary to give effect to this Section 1.7(b).
1.8 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the stock
transfer books of Company shall be closed and no further registration of
transfers of shares of Company Common Stock shall thereafter be made. On or
after the Effective Time, any Certificates (as defined in Section 1.9) presented
to the Exchange Agent or Parent for any reason shall be converted into the right
to receive Merger Consideration with respect to the shares of Company Common
Stock formerly represented thereby and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 1.13.
1.9 EXCHANGE OF CERTIFICATES.
(a) Parent shall authorize American Stock Transfer & Trust Company
or one or more other persons reasonably acceptable to Company to act as Exchange
Agent in connection with the First Merger (the "Exchange Agent"). Promptly after
the Effective Time, Parent shall cause the Exchange Agent to mail to former
record holders of shares of Company Common Stock letters of transmittal and
instructions for surrendering their certificates formerly representing shares of
Company Common Stock ("Certificates") in exchange for Merger Consideration. The
fees and expenses of the Exchange Agent shall be paid by Parent, and Parent
shall indemnify Company against actions taken by the Exchange Agent pursuant
hereto and pursuant to any Exchange Agent agreement other than for acts or
omissions which constitute willful misconduct or gross negligence, pursuant to
the agreement with Exchange Agent.
(b) Promptly after the Effective Time, Parent shall deliver to the
Exchange Agent sufficient shares of Parent Common Stock to satisfy Merger
Consideration and sufficient cash to satisfy payments for fractional shares.
After the Effective Time, upon receipt of Certificates for cancellation,
together with a properly completed letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss of, and title to, the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent) and other requested documents and in accordance with the instructions
thereon, the holder of such Certificates shall be entitled to receive in
exchange therefor (i) a certificate representing that number of whole shares of
Parent Common Stock into which the shares of Company Common Stock theretofore
represented
5
by the Certificates so surrendered shall have been converted pursuant to Section
1.6(a)(i) and (ii) a check in the amount of any cash due pursuant to Sections
1.6(b) and 1.13. No interest shall be paid or shall accrue on any such amounts.
(c) Until surrendered in accordance with the provisions of this
Section 1.9, each Certificate shall represent for all purposes only the right to
receive Merger Consideration and, if applicable, amounts under Section 1.13.
Shares of Parent Common Stock into which shares of Company Common Stock shall be
converted in the First Merger at the Effective Time shall be deemed to have been
issued at the Effective Time. If any certificates representing shares of Parent
Common Stock are to be issued in a name other than that in which the Certificate
surrendered is registered, it shall be a condition of such exchange that the
person requesting such exchange deliver to the Exchange Agent all documents
necessary to evidence and effect such transfer and pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of a certificate
representing shares of Parent Common Stock in a name other than that of the
registered holder of the Certificate surrendered, or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Beginning the date which is six months following the Closing Date,
Parent shall act as the Exchange Agent and thereafter any holder of an
unsurrendered Certificate shall look solely to Parent for any amounts to which
such holder may be due, subject to applicable law. Notwithstanding any other
provisions of this Agreement, any portion of the Merger Consideration remaining
unclaimed five years after the Effective Time (or such earlier date immediately
prior to such time as such amounts would otherwise escheat to, or become
property of, any governmental entity) shall, to the extent permitted by law,
become the property of Parent free and clear of any claims or interest of any
person previously entitled thereto.
1.10 NO LIABILITY. None of Parent, the First Surviving Entity, the Second
Surviving Entity or the Exchange Agent shall be liable to any person in respect
of any shares (or dividends or distributions with respect thereto) or cash
payments delivered to a public official pursuant to any applicable escheat,
abandoned property or similar law.
1.11 LOST CERTIFICATES. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if reasonably
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it or its affiliates or agents with respect to such Certificate, the
Exchange Agent shall deliver in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration and any amounts due pursuant to Section
1.13.
1.12 WITHHOLDING RIGHTS. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as it is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Parent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding was
made.
1.13 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividend or
other distribution declared with respect to Parent Common Stock with a record
date after the date
6
during which the Effective Time occurs shall be paid to holders of unsurrendered
Certificates or holders who comply with the provisions of Section 1.11 (with
regard to lost certificates) until such holders surrender such Certificates or
submit an affidavit (and any reasonably required bond) in accordance with
Section 1.11. Upon the surrender of such Certificates in accordance with Section
1.9 or submission of an affidavit (and any reasonably required bond) in
accordance with Section 1.11, there shall be paid to such holders, promptly
after such surrender or submission, as the case may be, the amount of dividends
or other distributions, without interest, declared with a record date after the
date during which the Effective Time occurs and not paid because of the failure
to surrender such Certificates for exchange.
1.14 ADDITIONAL MATTERS. At and after the Effective Time, the officers
and directors of Company prior to the Second Merger and the agents of LLC
following the Second Merger shall be authorized to execute and deliver, in the
name and on behalf of Company, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of Company, any other
actions and things to vest, perfect or confirm of record or otherwise in the
First Surviving Entity or the Second Surviving Entity, as the case may be, any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the First Surviving Entity or the Second
Surviving Entity, as the case may be, as a result of, or in connection with, the
Mergers.
1.15 CONVERSION OF SHARES IN SECOND MERGER. At the effective time of the
Second Merger, by virtue of the Second Merger and without any action on the part
of any party hereto or any holder of any capital stock of the First Surviving
Entity or any member interests in LLC, and conditioned upon the prior occurrence
of the Effective Time, all of the capital stock of the First Surviving Entity
issued and outstanding immediately prior to the Second Merger shall be converted
into member interests in LLC, and all member interests in LLC immediately prior
to the effective time of the Second Merger shall continue to be outstanding
following such effective time and shall be unaffected by the Second Merger.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth on the disclosure schedule delivered by Company to
Parent on the date hereof (the "Company Disclosure Schedule"), the section
numbers of which are numbered to correspond to the section numbers of this
Agreement to which they refer, Company hereby makes the following
representations and warranties to, and agreements with, Parent, Sub and LLC:
2.1 ORGANIZATION AND QUALIFICATION.
(a) Each of Company and each Company Subsidiary (as defined in
Section 2.4(a)) is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has corporate or similar power and authority to own, lease and operate its
assets and to carry on its business as now being and as heretofore conducted.
Each of Company and each Company Subsidiary is qualified or otherwise authorized
to transact business as a foreign corporation or other organization in all
jurisdictions in which such qualification or authorization is required by law,
except for jurisdictions in which the failure to be so qualified or authorized
would not reasonably be expected to have a Company Material Adverse Effect.
"Company Material Adverse Effect" shall mean a material adverse effect on the
7
assets, properties, business, results of operations or financial condition of
Company, or its successor entities, and the Company Subsidiaries, taken as a
whole; provided that a "Company Material Adverse Effect" shall not include any
such adverse effect primarily related to (i) Company's acts or omissions
required by the terms of this Agreement (ii) the economy or securities markets
of the United States in general or (iii) conditions affecting the biotechnology
and biopharmaceutical industries generally, in the case of (ii) or (iii),
without a disproportionate impact on Company and the Company Subsidiaries.
(b) Company has previously provided or made available to Parent true
and complete copies of the charter and by-laws or other organizational documents
of Company and each Company Subsidiary as presently in effect, and none of
Company or any Company Subsidiary is in default in the performance, observation
or fulfillment of such documents, except, in the case of Company Subsidiaries,
such defaults that, in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
2.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT. Company has the
corporate power and authority to enter into, execute and deliver this Agreement
and, subject, in the case of consummation of the Mergers, to the adoption of
this Agreement by the holders of Company Common Stock, to perform fully its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Company. No other action on the part of Company is
necessary to consummate the transactions contemplated hereby (other than
adoption of this Agreement by the holders of Company Common Stock). This
Agreement has been duly executed and delivered by Company and constitutes a
valid and binding obligation of Company, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors
generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
affirmative approval of the holders of a majority of the shares of Company
Common Stock outstanding is the only vote of holders of Company capital stock
required to adopt and approve this Agreement and the Mergers.
2.3 CAPITALIZATION AND TITLE TO SHARES
(a) Company is authorized to issue 100,000,000 shares of Company
Common Stock, of which 39,061,379 shares were issued and outstanding as of
February 11, 2004. All of the issued and outstanding shares of Company Common
Stock are duly authorized, validly issued, fully paid, nonassessable and free of
pre-emptive rights.
(b) Company has reserved 6,275,000 shares of Company Common Stock
for issuance pursuant to all of the Company Options. Company Options to purchase
4,188,503 shares of Company Common Stock were outstanding as of February 25,
2004. Section 2.3(b) of the Company Disclosure Schedule includes a true and
complete list of all Company Options outstanding as of February 25, 2004, which
schedule shows the underlying shares that have vested, the applicable vesting
and acceleration provisions, the expiration date, and whether the option is an
incentive stock option. No Company Options have been granted since February 25,
2004. True and complete copies of all instruments (or the forms of such
instruments) referred to in this section have been furnished or made available
to Parent. Except as set forth in Section
8
2.3(b) of the Company Disclosure Schedule, Company is not obligated to
accelerate the vesting of any Company Options as a result of the Mergers. Each
Company Stock Option Plan (including all amendments) has been duly approved by
Company's stockholders.
(c) Company has reserved 250,000 shares of Company Common Stock for
future issuance under the Company Purchase Plan.
(d) Company is authorized to issue 20,000,000 shares of Preferred
Stock ("Company Preferred Stock"), none of which are issued and outstanding.
(e) Except as set forth in Section 2.3(e) of the Company Disclosure
Schedule, and except for (i) shares indicated as issued and outstanding on
February 11, 2004 in Section 2.3(a) and (ii) shares issued after such date upon
(A) the exercise of outstanding Company Options listed in Section 2.3(b) of the
Company Disclosure Schedule or granted after the date of this Agreement without
violating the terms of this Agreement or (B) the exercise of purchase rights in
accordance with the Company Purchase Plan in an amount not in excess of the
number indicated as reserved for such purpose in Section 2.3(c), there are not
as of the date hereof, and at the Effective Time there will not be, any shares
of Company Common Stock issued and outstanding.
(f) Company's authorized capital stock consists solely of the
Company Common Stock described in Section 2.3(a) and the Company Preferred Stock
described in Section 2.3(d). Except as set forth in Section 2.3(f)(i) of the
Company Disclosure Schedule, there are not as of the date hereof, and at the
Effective Time there will not be, authorized or outstanding any subscriptions,
options, conversion or exchange rights, warrants, repurchase or redemption
agreements, or other agreements, claims or commitments of any nature whatsoever
obligating Company to issue, transfer, deliver or sell, or cause to be issued,
transferred, delivered, sold, repurchased or redeemed, additional shares of the
capital stock or other securities of Company or obligating Company to grant,
extend or enter into any such agreement, other than Company Options listed in
Section 2.3(b) of the Company Disclosure Schedule or granted after the date of
this Agreement without violating the terms of this Agreement and rights to
purchase shares of Company Common Stock pursuant to the Company Purchase Plan in
an amount not in excess of the number indicated as reserved for such purpose in
Section 2.3(c). To the Knowledge of Company, as of the date of this Agreement,
there are no stockholder agreements, voting trusts, proxies or other agreements,
instruments or understandings with respect to the voting of the capital stock of
Company. "Knowledge of Company" means the actual knowledge after reasonable
inquiry of the individuals named in Section 2.3(f)(ii) of the Company Disclosure
Schedule.
(g) Neither Company nor any Company Subsidiary beneficially owns any
shares of capital stock of Parent.
(h) Company has no outstanding bonds, debentures, notes or other
indebtedness that have the right to vote on any matters on which stockholders
may vote.
9
2.4 COMPANY SUBSIDIARIES.
(a) Section 2.4(a) of the Company Disclosure Schedule sets forth a
true and complete list of the names, jurisdictions of organization and
capitalization of each Company Subsidiary and, for Company and each Company
Subsidiary, the jurisdictions in which it is qualified to do business. Section
2.4(a) of the Company Disclosure Schedule also sets forth for each such
subsidiary the individuals who comprise the board of directors or comparable
body for each such entity. To the extent requested by Parent, Company agrees to
take, or cause to be taken, the actions necessary so that those individuals will
resign and be replaced by individuals specified by Parent effective as of the
Effective Time. All issued and outstanding shares or other equity interests of
each Company Subsidiary are owned directly by Company or another Company
Subsidiary free and clear of any charges, liens, encumbrances, security
interests or adverse claims. As used in this Agreement, "Company Subsidiary"
means any corporation, partnership or other organization, whether incorporated
or unincorporated, of which (i) Company or any Company Subsidiary is a general
partner or (ii) at least 50% of the securities or other interests having voting
power to elect a majority of the board of directors or others performing similar
functions with respect to such corporation, partnership or other organization
are directly or indirectly owned or controlled by Company or by any Company
Subsidiary, or by Company and one or more Company Subsidiary.
(b) There are not as of the date hereof, and at the Effective Time
there will not be, any subscriptions, options, conversion or exchange rights,
warrants, repurchase or redemption agreements, or other agreements, claims or
commitments of any nature whatsoever obligating any Company Subsidiary to issue,
transfer, deliver or sell, or cause to be issued, transferred, delivered, sold,
repurchased or redeemed, shares of the capital stock or other securities of
Company or any Company Subsidiary or obligating Company or any Company
Subsidiary to grant, extend or enter into any such agreement. To the Knowledge
of Company, there are no stockholder agreements, voting trusts, proxies or other
agreements, instruments or understandings with respect to the voting of the
capital stock of any Company Subsidiary.
(c) Section 2.4(c) of the Company Disclosure Schedule sets forth,
for each Company Joint Venture, the interest held by Company and the
jurisdiction in which such Company Joint Venture is organized. Interests in
Company Joint Ventures held by Company are held directly by Company or a Company
Subsidiary, free and clear of any charges, liens, encumbrances, security
interests or adverse claims. The term "Company Joint Venture" means any
corporation or other entity (including partnership, limited liability company
and other business association) that is not a Company Subsidiary and in which
Company or one or more Company Subsidiaries owns an equity interest (other than
equity interests held for passive investment purposes which are less than 10% of
any class of the outstanding voting securities or other equity of any such
entity).
2.5 SEC REPORTS. Company previously has made available to Parent (i) its
Annual Report on Form 10-K for the year ended December 31, 2002 (the "Company
10-K"), as filed with the Securities and Exchange Commission (the "SEC"), (ii)
all proxy statements relating to Company's meetings of stockholders held or to
be held after December 31, 2002 and (iii) all other documents filed by Company
with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") since January 1, 1999 and prior to the date of this Agreement
(the "Company SEC Reports"). As of their respective dates, or, if amended, as of
the date of the
10
most recent amendment, such documents complied, and all documents filed by
Company with the SEC under the Exchange Act between the date of this Agreement
and the Closing Date will comply, in all material respects, with applicable SEC
requirements and did not, or in the case of documents filed on or after the date
hereof will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The parties agree that failure of Company's chief executive
officer or chief financial officer to provide an unqualified certification in
any certification required to be filed with any document filed with the SEC
between the date of this Agreement and the Closing Date will constitute an event
that has a Company Material Adverse Effect. On and since January 1, 2003,
Company has timely filed, and between the date of this Agreement and the Closing
Date shall timely file, with the SEC all periodic reports required to be filed
by it under the Exchange Act. No Company Subsidiary is required to file any
form, report or other document with the SEC.
2.6 FINANCIAL STATEMENTS. The consolidated financial statements
contained in the Company 10-K and in Company's quarterly report on Form 10-Q for
the quarter ended September 30, 2003 (the "Company 10-Q") have, in all material
respects, been prepared from, and are in accordance with, the books and records
of Company and fairly present the consolidated financial condition and results
of operations of Company and the Company Subsidiaries, taken as a whole, as of
and for the periods presented therein, all in conformity with generally accepted
accounting principles applied on a consistent basis, except as otherwise
indicated therein and subject in the case of the unaudited financial statements
included in the Company 10-Q to normal year-end and audit adjustments, which in
the aggregate are not material, and the absence of notes in the unaudited
financial statements.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. As of December 31, 2002, Company
and the Company Subsidiaries had no material liabilities of any nature, whether
accrued, absolute, contingent or otherwise (including without limitation,
liabilities as guarantor or otherwise with respect to obligations of others or
liabilities for taxes due or then accrued or to become due), required to be
reflected or disclosed in the balance sheet dated December 31, 2002 (or the
notes thereto) included in the Company 10-K (the "Company Balance Sheet") that
were not adequately reflected or reserved against on the Company Balance Sheet.
Company has no material liabilities of any nature, whether accrued, absolute,
contingent or otherwise, other than liabilities (i) adequately reflected or
reserved against on the Company Balance Sheet, (ii) reflected in Company's
unaudited balance sheet dated September 30, 2003, included in the Company 10-Q,
(iii) included in Section 2.7 of the Company Disclosure Schedule, (iv) incurred
since September 30, 2003 in the ordinary course of business, (v) disclosed in
the Company SEC Reports or (vi) that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
2.8 ABSENCE OF ADVERSE CHANGES.
(a) Except as set forth in Section 2.8 of the Company Disclosure
Schedule, there has not been any change, event or circumstance that has had, or
is reasonably likely to have, a Company Material Adverse Effect since September
30, 2003.
(b) Except as set forth in Section 2.8 of the Company Disclosure
Schedule, there has not been any action taken by Company or any Company
Subsidiary during the period
11
from September 30, 2003 through the date of this Agreement that, if taken during
the period from the date of this Agreement through the Effective Time, would
constitute a breach of any portion of Section 4.1 other than the Parent
notification and consultation requirements of Section 4.1(a)(vii); provided,
however, that, for purposes of this Section 2.8(b), the threshold in 4.1(b)(i)
shall be $500,000 and the threshold in 4.1(b)(vii) for aggregate capital
expenditures shall be $1 million.
2.9 COMPLIANCE WITH LAWS.
(a) Company and the Company Subsidiaries including their respective
employees (to the extent Company or a Company Subsidiary would be liable with
respect thereto) have obtained each Federal, state, county, local or foreign
governmental consent, license, permit, grant or other authorization of a
governmental entity material to the operation of the business of Company or any
Company Subsidiary (collectively called "Permits"), and all of such Permits are
in full force and effect, except where the failure to obtain or have any such
Permit would not reasonably be expected to have a Company Material Adverse
Effect; and no proceeding is pending or, to the Knowledge of Company, threatened
to revoke, suspend or adversely modify any of such Permits.
(b) Company and the Company Subsidiaries have complied in a timely
manner and in all material respects, with all laws, statutes, regulations,
rules, ordinances and judgments, decrees, orders, writs and injunctions, of any
court or governmental entity (collectively, "Laws") relating to any of the
property owned, leased or used by them, or applicable to their business,
including, but not limited to, (i) the Foreign Corrupt Practices Act of 1977 and
any other Laws regarding use of funds for political activity or commercial
bribery and (ii) laws relating to equal employment opportunity, discrimination,
occupational safety and health, environmental matters, interstate commerce,
anti-kickback, healthcare and antitrust.
(c) Company and the Company Subsidiaries including their respective
employees (to the extent Company or a Company Subsidiary would have liability
with respect thereto) are not in violation of and have no liabilities, whether
accrued, absolute, contingent or otherwise, under any Federal, state, local or
foreign law, ordinance or regulation, including without limitation the
Xxxxxxxx-Xxxxx Act of 2002 and any rules and regulations promulgated thereunder,
or any order, judgment, injunction, decree or other requirement of any court,
arbitrator or governmental or regulatory body, relating to the operation of
contract research services, labor and employment practices, health and safety,
zoning, pollution or protection of the environment except for violations of or
liabilities under any of the foregoing which would not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(d) Each product and product candidate subject to United States Food
and Drug Administration (the "FDA") jurisdiction under the Federal Food, Drug
and Cosmetic Act ("FDCA"), the Public Health Service Act ("PHS") or similar
foreign governmental entity or Law that is manufactured, tested, distributed,
held and/or marketed by Company, the Company Subsidiaries and their licensees is
being manufactured, tested, distributed, held and marketed in compliance in all
material respects with all applicable requirements under the FDCA, the PHS or
such similar Law of any foreign jurisdiction including, but not limited to,
those relating to investigational use, premarket clearance, good manufacturing
practices, labeling, advertising, promotional activities, record keeping, filing
of reports and security.
12
(e) Company has, prior to the execution of this Agreement, provided
or made available to Parent copies of all documents in the possession of Company
or any Company Subsidiary (or to which any of them has access) material to
assessing compliance with the FDCA and its implementing regulations and the PHS
and its implementing regulations, including, but not limited to, copies of (i)
all warning letters and untitled letters, notices of adverse findings and
similar correspondence received in the last three years, (ii) all 483s and other
audit reports performed during the last three years, and (iii) any document
concerning any significant oral or written communication received from the FDA
in the last three years. Company has provided to Parent all FDA correspondence
and minutes from meetings with FDA during the last two years that Parent has
requested.
(f) Company and the Company Subsidiaries have not been notified by a
licensee or partner of any violation of the Federal Anti-Kickback Act, any
Federal conspiracy statutes, the Prescription Drug Marketing Act, Federal False
Claims Act, Federal Xxxxx Law or any other Federal or state statute related to
sales and marketing practices of pharmaceutical manufacturers and others
involved in the purchase and sale of pharmaceutical products with respect to any
products of Company or any Company Subsidiary.
(g) Company and the Company Subsidiaries have not been notified of
any failure by a licensee or partner to comply with, or maintain systems and
programs to ensure compliance with, all requirements of the FDCA, PHS, and
regulations issued thereunder, and similar or related foreign or domestic laws
and regulations, pertaining to programs or systems regarding product quality,
notification of facilities and products, corporate integrity, pharmacovigilence
and conflict of interest including, but not limited to, Current Good
Manufacturing Practice Requirements, Good Laboratory Practice Requirements,
Establishment Registration and Product Listing requirements, requirements
applicable to the debarment of individuals, requirements applicable to the
conflict of interest of clinical investigators and Adverse Drug Reaction
Reporting requirements with respect to any products of Company or any Company
Subsidiary.
(h) Company and the Company Subsidiaries have not been notified of
any failure by a licensee or partner to have at all times complied with their
obligations to report accurate pricing information for Company's or a Company
Subsidiary's pharmaceutical products to the government and to pricing services
relied upon by the government and other payors for pharmaceutical products,
including without limitation their obligations to report accurate "Fees and
Prices" under the Medicaid Rebate Statute and accurate average wholesale prices.
(i) Company and the Company Subsidiaries are in compliance with all
export control laws, including those administered by the U.S. Department of
Commerce and the U.S. Department of State, and asset control laws, including
those administered by the U.S. Department of the Treasury.
2.10 ACTIONS AND PROCEEDINGS.
(a) There are no outstanding orders, judgments, injunctions, decrees
or other requirements of any court, arbitrator or governmental or regulatory
body against Company, any Company Subsidiary or any of their securities, assets
or properties. Except as disclosed in the Company SEC Reports, there are no
material actions, suits or claims or legal, administrative or
13
arbitration proceedings pending or, to the Knowledge of Company, threatened
against Company, any Company Subsidiary, or any of their securities, assets or
properties. To the Knowledge of Company, except as disclosed in a Company SEC
Report, there is no fact, event or circumstance now in existence that reasonably
would be expected to give rise to any action, suit, claim, proceeding or
investigation that, individually or in the aggregate, would be reasonably
expected to have a Company Material Adverse Effect or materially interfere with
Company's ability to consummate the transactions contemplated hereby.
(b) Company has not been notified of any pending or threatened
civil, criminal or administrative actions, suits, demands, claims, hearings,
notices of violation, investigations, proceedings or demand letters relating to
any alleged hazard or alleged defect in design, manufacture, materials or
workmanship, including any failure to warn or alleged breach of express or
implied warranty or representation, relating to any product manufactured,
distributed or sold by or on behalf of Company or any Company Subsidiary, which
if adversely determined, would have a Company Material Adverse Effect. Company
is not a party to or defendant in any product liability claims.
(c) There are no pending nor, to the Knowledge of Company,
threatened civil, criminal or administrative actions, suits, demands, claims,
hearings, notices of violation, investigations, proceedings or demand letters
relating to any alleged failure to meet professional standards of the contract
research industry or breach of contractual obligations with respect to contract
research services provided or to be provided by Company or any Company
Subsidiary, or otherwise against Company or any Company Subsidiary arising out
of the provision or agreement to provide contract research services, which if
adversely determined, would have a Company Material Adverse Effect.
2.11 CONTRACTS AND OTHER AGREEMENTS.
(a) (i) Neither Company nor any Company Subsidiary is a party to
or bound by, and neither they nor their properties are subject to, any contract
or other agreement required to be disclosed in a Form 10-K, Form 10-Q or Form
8-K of the SEC which is not disclosed in the Company 10-K, the Company 10-Q or
the Quarterly Reports on Forms 10-Q of Company filed with the SEC covering the
first and second fiscal quarters of Company's 2003 fiscal year (such Quarterly
Reports on Forms 10-Q, together with the Company 10-Q, the "Company 2003 10-Qs")
or a Form 8-K filed by Company. All of such contracts and other agreements are
valid, subsisting, in full force and effect, binding upon Company or the
applicable Company Subsidiary, and, to the Knowledge of Company, binding upon
the other parties thereto in accordance with their terms, and Company and the
Company Subsidiaries have paid in full or accrued all amounts now due from them
thereunder, and have satisfied in full or provided for all of their liabilities
and obligations thereunder which are presently required to be satisfied or
provided for and are not in default under any of them, except for defaults which
individually or in the aggregate would not reasonably be expected to result in a
Company Material Adverse Effect, nor, to the Knowledge of Company, is any other
party to any such contract or other agreement in default thereunder, except for
defaults which individually or in the aggregate would not reasonably be expected
to result in a Company Material Adverse Effect nor does any condition exist that
with notice or lapse of time or both would constitute a default thereunder,
except for defaults which individually or in the aggregate would not reasonably
be expected to result in a Company Material Adverse Effect. True and complete
copies of all of the
14
contracts and other agreements referred to in this Section 2.11 have been
provided or made available to Parent.
(ii) All of the Select Agreements (as defined below) are
valid, subsisting, in full force and effect, binding upon Company or the
applicable Company Subsidiary, and, to the Knowledge of Company, binding upon
the other parties thereto in accordance with their terms, and Company and the
Company Subsidiaries have paid in full or accrued substantially all amounts now
due from them thereunder, and have satisfied in full or provided for all of
their liabilities and obligations thereunder which are presently required to be
satisfied or provided for and are not in default under any of them other than
defaults that could not reasonably be expected to result in a material liability
or termination of the Agreement, nor, to the Knowledge of Company, is any other
party to any such contract or other agreement in default thereunder, nor does
any condition exist that with notice or lapse of time or both would constitute a
default thereunder, other than defaults that could not reasonably be expected to
result in a material liability or termination of the Agreement. "Select
Agreements" mean any and all agreements to which Company or any Company
Subsidiary and any of the following entities or their affiliates (or either's
successors in interest) is a party: (1) Schering AG, (2) Boehringer Ingelheim
Pharma KG (3) Bioenvision, Inc., (4) Xxxxx XX, (5) Millennium Pharmaceuticals,
Inc, or (6) British Technology Group Ltd.
(b) Other than those contracts disclosed in the Company 10 K or the
Company 2003 10 Qs, Section 2.11(b) of the Company Disclosure Schedule and the
Select Agreements, neither Company nor any Company Subsidiary is a party to any
agreement that limits or restricts Company, any Company Subsidiary or any of
their affiliates or successors in competing or engaging in any line of business,
in any therapeutic area, in any geographic area or with any person.
(c) Except as set forth in Section 2.11(c) of the Company Disclosure
Schedule, neither Company nor any Company Subsidiary is a party to any agreement
obligating Company to file a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), which filing has not yet been made, and
Company is in material compliance with each such agreement, all of which are
listed on Section 2.11(c) of the Company Disclosure Schedule. No registration
rights involving Company securities shall survive consummation of the First
Merger.
(d) Section 2.11(d) of the Company Disclosure Schedule contains a
correct and complete list of all effective registration statements filed by
Company on Form S-3 or Form S-8 or otherwise relying on Rule 415 under the
Securities Act.
(e) Other than agreements incorporated by reference into or listed
as material contracts in the exhibit index of the Company 10-K, the Company 2003
10-Qs, or Form 8-Ks filed by the Company and the Select Agreements, in each case
unredacted copies of which have previously been provided or made available to
Parent, and except as set forth in Section 2.11(e) of the Company Disclosure
Schedule, neither Company nor any Company Subsidiary is a party to any agreement
(i) involving research, development or the license of Proprietary Rights (as
defined in Section 2.12(a)), (ii) granting a right of first refusal, or right of
first offer or comparable right with respect to Proprietary Rights, (iii)
relating to a joint venture, partnership or other arrangement involving a
sharing of profits, losses, costs or liabilities with another person or
15
entity, (iv) providing for the payment or receipt by Company or any Company
Subsidiary of milestone payments or royalties, (v) including or involving a loan
to a director or officer, or (vi) that individually requires or contemplates
aggregate expenditures by Company and/or any Company Subsidiary in any twelve
month period of more than $600,000.
(f) Except as set forth in Section 2.11(f) of the Company Disclosure
Schedule, to the Knowledge of Company, no executive officer or director of
Company (i) has (whether directly or indirectly through another entity in which
such person has a material interest, other than as the holder of less than 2% of
a class of securities of a publicly traded company) any material interest in any
property or assets of Company (except as a stockholder) or a Company Subsidiary,
any competitor, customer, supplier or agent of Company or a Company Subsidiary ,
or (ii) is currently a party to any material contract or agreement with Company
or a Company Subsidiary.
(g) Neither Company nor any Company Subsidiary is party to any
interest rate, equity or other swap or derivative instrument.
2.12 PROPERTY.
(a) Company and the Company Subsidiaries own, are licensed to use,
or otherwise have the right to use all patents, trademarks, service marks, trade
names, trade secrets, franchises, inventions, copyrights and all other
technology and intellectual property (including, without limitation, biological
materials), all registrations of any of the foregoing, or applications therefor,
and all grants and licenses or other rights running to or from Company or a
Company Subsidiary relating to any of the foregoing, that are material to their
businesses as presently conducted or as contemplated to be conducted
(collectively, the "Proprietary Rights"). To the Knowledge of Company, all
patents, trademarks and copyrights referred to above are valid and subsisting.
On the Closing Date, Company shall provide Parent with a schedule of any taxes,
maintenance fees or actions falling due within 90 days of the Closing Date with
respect to such patents, trademarks and copyrights. Company is not aware of any
basis for any claim by any third party that the businesses of Company or the
Company Subsidiaries infringe upon the proprietary rights of others, nor has
Company or any Company Subsidiary received any notice or claim of infringement
from any third party. Company is not aware of any existing or threatened
infringement by any third party on, or any competing claim of right to use or
own any of, the Proprietary Rights. Except as set forth in Section 2.12(a) of
the Company Disclosure Schedule, Company and the Company Subsidiaries have the
right to sell their products and services (whether now offered for sale or under
development) free from any royalty or other obligations to third parties. To the
Knowledge of Company, none of the activities of the employees of Company or any
Company Subsidiary on behalf of such entity violates any agreement or
arrangement which any such employees have with former employers. All employees
and consultants who contributed to the discovery or development of any of the
Proprietary Rights did so either (a) within the scope of their employment such
that, in accordance with applicable law, all Proprietary Rights arising
therefrom became the exclusive property of Company or the Company Subsidiary or
(b) pursuant to written agreements assigning all Proprietary Rights arising
therefrom to Company or the Company Subsidiary. All employees engaged in the
development of experimental data relevant to the discovery or development of any
of the Proprietary Rights have been instructed to, and reasonable efforts are
made to verify that they do, maintain contemporaneous records of their
experiments in laboratory notebooks which are
16
signed, dated, witnessed and maintained in accordance with good scientific
practices. Except as set forth in the Company SEC Reports, there are no
settlements, forbearances to xxx, consents, judgments, or orders or similar
obligations that: (i) restrict any Proprietary Rights; (ii) restrict the conduct
of the business of Company or any of its employees; or (iii) grant third parties
any material rights under Proprietary Rights. No material trade secret of
Company has been disclosed or authorized to be disclosed to any third party in
violation of confidentiality obligations to Company and, to the Knowledge of
Company, no party to a nondisclosure agreement with Company is in breach or
default thereof. No current or former director, officer, consultant or employee
of Company will, after giving effect to the Mergers, own any of the Proprietary
Rights. The execution of, the delivery of, the consummation of the Mergers
contemplated by, and the performance of Company's obligations under, this
Agreement will not result in any loss or impairment of any Proprietary Rights.
(b) Company and each Company Subsidiary has all assets, properties,
rights and contracts necessary to permit Company and the Company Subsidiaries to
conduct their business as it is currently being conducted, except where the
failure to have such assets, properties, rights and contracts could not
reasonably be expected to have a Company Material Adverse Effect. Company and
each Company Subsidiary has good, clear and marketable title to all of its
properties, interests in properties and assets, real and personal, reflected in
the Company Balance Sheet (except properties, interests in properties and assets
sold or otherwise disposed of since the Company Balance Sheet Date in the
ordinary course of business consistent with past practice), or with respect to
leased properties and assets, valid leasehold interests in such properties and
assets, in each case, free and clear of all imperfections of title,
restrictions, encroachments, liens and easements, except (i) liens for current
taxes not yet due and payable, (ii) such imperfections of title, restrictions,
encroachments, liens and easements as do not and could not reasonably be
expected to materially detract from or interfere with the use or value of the
properties subject thereto or affected thereby, or otherwise materially impair
business operations involving such properties and (iii) liens securing debt
which are reflected on the Company Balance Sheet. There are no written or oral
subleases, licenses, occupancy agreements or other contractual obligations that
grant the right of use or occupancy of any real property owned or leased by
Company or any Company Subsidiary (collectively, the "Real Property"), and there
is no person in possession of the Real Property other than Company and the
Company Subsidiaries. There is no pending, or, to the Knowledge of Company,
threatened eminent domain, condemnation or similar proceeding affecting any Real
Property. The property and equipment of Company and each Company Subsidiary that
are used in the operations of business are (i) in good operating condition and
repair and (ii) have been maintained in accordance with normal industry
practices. Section 2.12(b) of the Company Disclosure Schedule lists all Real
Property.
2.13 INSURANCE. All policies or binders of material fire, liability,
product liability, workers' compensation, vehicular, directors' and officers'
and other material insurance held by or on behalf of Company and the Company
Subsidiaries are in full force and effect, are reasonably believed by Company to
be adequate for the businesses engaged in by Company and the Company
Subsidiaries and are in material conformity with the requirements of all leases
or other agreements to which Company or the relevant Company Subsidiary is a
party and, to the Knowledge of Company, are valid and enforceable in accordance
with their terms. Neither Company nor any Company Subsidiary is in material
default with respect to any provision
17
contained in such policy or binder nor has any of Company or a Company
Subsidiary failed to give any notice or present any claim under any such policy
or binder in due and timely fashion. All premiums for each policy or binder have
been paid for the current period, and there are no outstanding premium finance
payments due for such period. There are no outstanding unpaid claims under any
such policy or binder. Neither Company nor any Company Subsidiary has received
notice of cancellation or non-renewal of any such policy or binder.
2.14 COMMERCIAL RELATIONSHIPS. Except as set forth in Section 2.14 of the
Company Disclosure Schedule, none of Company's or the Company Subsidiaries'
material suppliers, collaborators, distributors, licensors or licensees has
canceled or otherwise terminated its relationship with Company or a Company
Subsidiary or has, during the last twelve months, materially altered its
relationship with Company or a Company Subsidiary. To the Knowledge of Company,
it is not the plan or intention of any of Company's or the Company Subsidiaries'
material suppliers, collaborators, distributors, licensors or licensees, and
neither Company nor any Company Subsidiary has received any written threat or
notice from any such entity, to terminate, cancel or otherwise materially modify
its relationship with Company or a Company Subsidiary. Without limiting the
generality of the foregoing, Company is in compliance with its material
diligence obligations, and has not failed to achieve any development milestones
within applicable time periods, under material license agreements.
2.15 TAX MATTERS.
(a) For purposes of this Agreement, the term "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means all United States Federal,
state and local, and all foreign, income, profits, franchise, gross receipts,
payroll, transfer, sales, employment, social security, unemployment insurance,
workers' compensation, use, property, excise, value added, ad valorem,
estimated, stamp, alternative or add-on minimum, recapture, environmental,
capital, withholding and any other taxes, charges, duties, impositions or
assessments, together with all interest, penalties and additions imposed on or
with respect to such amounts, including any liability for taxes of a predecessor
entity. "Tax Return" means any return, declaration, report, claim for refund,
tax shelter disclosure statements or information return or statement filed or
required to be filed with any taxing authority in connection with the
determination, assessment, collection or imposition of any Taxes, including any
attachments thereto and any amendments thereof.
(b) All Tax Returns required to be filed by or with respect to
Company and the Company Subsidiaries have been filed within the time and in the
manner prescribed by law. All such Tax Returns are true, correct and complete in
all material respects, and all Taxes owed by Company or the Company
Subsidiaries, whether or not shown on any Tax Return, have been paid. Company
and the Company Subsidiaries file Tax Returns in all jurisdictions where they
are required to so file, and no claim has ever been made by any taxing authority
in any other jurisdiction that Company or the Company Subsidiaries are or may be
subject to taxation by that jurisdiction.
(c) There are no liens or other encumbrances with respect to Taxes
upon any of the assets or properties of Company or the Company Subsidiaries,
other than with respect to Taxes not yet due and payable.
18
(d) No audit is currently pending with respect to any Tax Return of
Company or the Company Subsidiaries, nor is Company aware of any information
which has caused or should cause them to believe that an audit by any tax
authority may be forthcoming. No deficiency for any Taxes has been proposed in
writing against Company or the Company Subsidiaries, which deficiency has not
been paid in full.
(e) There are no outstanding agreements, waivers or arrangements
extending the statutory period of limitation applicable to any claim for, or the
period for the collection or assessment of, Taxes due from or with respect to
Company or the Company Subsidiaries for any taxable period, no power of attorney
granted by or with respect to Company or the Company Subsidiaries relating to
Taxes is currently in force, and no extension of time for filing any Tax Return
required to be filed by or on behalf of Company or any Company Subsidiary is in
force.
(f) With respect to any period for which Tax Returns have not yet
been filed, or for which Taxes are not yet due or owing, the Company Balance
Sheet reflects, in accordance with generally accepted accounting principles,
adequate reserve for such Taxes (excluding any "deferred taxes" or similar items
that reflect timing differences between tax and financial accounting principles)
in Company's books and records.
(g) Company and the Company Subsidiaries have not been and are not
currently in violation (or, with or without notice or lapse of time or both,
would be in violation) of any applicable law or regulation relating to the
payment or withholding of Taxes, and all withholding and payroll Tax
requirements required to be complied with by Company and the Company
Subsidiaries as of the date hereof (including requirements to deduct, withhold
and pay over amounts to any governmental authority and to comply with any record
keeping and reporting requirements in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or other third
party) have been satisfied.
(h) Company and the Company Subsidiaries are not and have never been
a party to or bound by, nor do they have or have they ever had any obligation
under, any Tax sharing agreement or similar contract or arrangement. Neither
Company nor any Company Subsidiary has any liability for the Taxes of any other
person under Treasury Regulation 1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, by contract, or otherwise.
(i) Except as set forth in Section 2.15(i) of the Company Disclosure
Schedule, neither Company nor any Company Subsidiary has made any payments, or
has been or is a party to any agreement, contract, arrangement or plan that
could result in it making payments, that have resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute payment"
within the meaning of Code Section 280G or in the imposition of an excise Tax
under Code Section 4999 (or any corresponding provisions of state, local or
foreign Tax law) or that were not or would not be deductible under Code Sections
162 or 404. Neither Company nor any Company Subsidiary has agreed to, or is
required to, make any adjustments under Section 481 of the Code by reason of a
change in accounting method or otherwise.
19
(j) Neither Company nor the Company Subsidiaries are, or were during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code.
(k) Neither Company nor any Company Subsidiary has distributed stock
of another corporation, or has had its stock distributed by another corporation,
in a transaction that was governed, or purported or intended to be governed, in
whole or in part, by Code Section 355 or 361.
(l) The Federal, state and foreign "net operating losses" and tax
credit carryforwards (collectively, the "tax attributes") of Company and its
consolidated subsidiaries through the date of the most recently filed applicable
Tax Return are set forth in Section 2.15(l) of the Company Disclosure Schedule.
Except as set forth in Section 2.15(l) of the Company Disclosure Schedule, no
such tax attribute is limited on its use pursuant to Section 382 or 383 of the
Code or the separate return limitation year ("SRLY") rules under the applicable
consolidated return provisions of the regulations of the U.S. Department of the
Treasury (the "Treasury Regulations") or comparable provisions of state, local
or foreign law.
(m) Company has delivered or made available to Parent complete and
correct copies of all Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by Company or any Company Subsidiary
with respect to the prior three (3) taxable years.
2.16 EMPLOYEE BENEFIT PLANS.
(a) Section 2.16(a) of the Company Disclosure Schedule contains a
complete list of all pension, savings, profit sharing, retirement, deferred
compensation, employment, welfare, fringe benefit, insurance, short and long
term disability, medical, death benefit, incentive, bonus, stock, vacation pay,
severance pay and similar plans, programs or arrangements (the "Plans") (other
than oral employment agreements that (i) do not constitute an "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or (ii), individually or in the
aggregate, are not material), including without limitation all employee benefit
plans as defined in Section 3(3) of ERISA, maintained by Company, the Company
Subsidiaries or an ERISA Affiliate (as defined below) or to which Company, any
of the Company Subsidiaries or an ERISA Affiliate are parties or required to
contribute. "ERISA Affiliate" means (i) any corporation included with the
Company in a controlled group of corporations within the meaning of Section
414(b) of the Code; (ii) any trade or business (whether or not incorporated)
that is under common control with the Company within the meaning of Section
414(c) of the Code; (iii) any member of an affiliated service group of which the
Company or any Company Subsidiary is a member within the meaning of Section
414(m) of the Code; or (iv) any other person or entity treated as aggregated
with the Company under Section 414(o) of the Code.
(b) Company has delivered or made available to Parent current,
accurate and complete copies of (i) each Plan that has been reduced to writing
and all amendments thereto, (ii) a summary of the material terms of each Plan
that has not been reduced to writing, including all amendments thereto, (iii)
the summary plan description for each Plan subject to Title I of ERISA, and in
the case of each other Plan, any similar employee summary (including but not
20
limited to any employee handbook description), (iv) for each Plan intended to be
qualified under Section 401(a) of the Code, the most recent determination or
opinion letter issued by the Internal Revenue Service ("IRS"), (v) for each Plan
with respect to which a Form 5500 series annual report/return is required to be
filed, the most recently filed such annual report/return and the annual
reports/returns for the two preceding years, together with all schedules and
exhibits, (vi) all insurance contracts, administrative services contracts, trust
agreements, investment management agreements or similar agreements maintained in
connection with any Plan, and (vii) for each Plan that is intended to be
qualified under Code Section 401(a), copies of compliance testing results
(including nondiscrimination testing (401(a)(4), ADP, ACP, multiple use),
402(g), 415 and top-heavy tests) for the 2003 plan year.
(c) There is no entity (other than Company or any Company
Subsidiary) that together with Company or any Company Subsidiary would be
treated as a single-employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA, including without limitation Cancer
Therapy and Research Center Endowment.
(d) Each Plan maintained by Company, a Company Subsidiary or an
ERISA Affiliate which is intended to be qualified under Section 401(a) of the
Code is so qualified, each Plan has been administered in all material respects
in accordance with the terms of such Plan and the provisions of any and all
statutes, orders or governmental rules or regulations, including without
limitation ERISA and the Code, and to the Knowledge of Company, nothing has been
done or not done with respect to any Plan that would result in any material
liability on the part of Company or any Company Subsidiary under Title I of
ERISA or Chapter 43 of the Code, and none of the Plans is currently under
examination by the IRS, Department of Labor or other U.S. government agency or
department. All contributions, premiums and other amounts due to or in
connection with each Plan under the terms of the Plan or applicable law have
been timely made, and provision has been made on the balance sheet included in
the Company 10-Q for such contributions, premiums and other amounts that were
not yet due as of the date of the balance sheet but were attributable to service
before such date.
(e) Except for continuation of health coverage to the extent
required under Section 4980B of the Code or Section 601 et seq. of ERISA, other
applicable law or as otherwise set forth in this Agreement, there are no
obligations under any Plan providing welfare benefits after termination of
employment.
(f) Except for individual employment agreements, each Plan can be
amended, modified or terminated without advance notice to or consent by any
employee, former employee or beneficiary, except as required by law.
(g) Neither Company nor any of the Company Subsidiaries nor any
ERISA Affiliate has ever maintained, sponsored, contributed to, been required to
contribute to, or incurred any liability under any
(i) multi-employer plan as defined in Section 3(37) or
Section 4001(a)(3) of ERISA,
21
(ii) multiple employer plan as defined in Section 413(c) of
the Code, or any plan that has two or more contributing sponsors at least two of
whom are not under common control, within the meaning of Section 4063(a) of
ERISA,
(iii) welfare benefit fund within the meaning of Section 419(e)
of the Code, or
(iv) voluntary employees' beneficiary association, within the
meaning of Section 501(c)(9) of the Code.
(h) Except as set forth in Section 2.16(h) of the Company Disclosure
Schedule, no employee of, consultant to, or other provider of services to
Company, any Company Subsidiary, or any ERISA Affiliates will be entitled to any
additional benefit or the acceleration of the payment or vesting of any benefit
under any Plan by reason of the Mergers.
(i) Except as set forth in Section 2.16(i) of the Company Disclosure
Schedule, neither Company nor any Company Subsidiary nor any ERISA Affiliate has
any "leased employees" within the meaning of Section 414(n) of the Code or any
independent contractors or other individuals who provide employee-type services
but who are not recognized by Company as employees of Company.
2.17 EMPLOYEE RELATIONS.
(a) Upon termination of the employment of any employees, other than
those employees included by name in Section 4.14(c) of the Company Disclosure
Schedule, none of Company, the Company Subsidiaries, the First Surviving Entity,
the Second Surviving Entity nor Parent shall be liable, by reason of the Mergers
or anything done in connection with the Mergers, to any of such employees for
severance pay or any other similar payments (other than accrued salary, vacation
or sick pay in accordance with normal policies). True and complete information
as to the name, current job title and compensation for each of the last three
years of all current directors and executive officers of Company has been
provided or made available to Parent.
(b) Company and each Company Subsidiary (i) is in compliance in all
material respects with all applicable foreign, Federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
employees, (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to employees, (iii) is not
liable for any arrears of wages, salaries, commissions, bonuses or other direct
compensation for any services performed or amounts required to be reimbursed to
any employees or consultants or any taxes or any penalty for failure to comply
with any of the foregoing, and (iv) is not liable for any payment to any trust
or other fund or to any governmental entity, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the ordinary course of
business and consistent with past practice), except for matters that,
individually or in the aggregate, would not reasonably be expected to result in
a liability in excess of $20 million.
(c) No work stoppage or labor strike against Company or any Company
Subsidiary is pending or, to the Knowledge of Company, threatened. Neither
Company nor any
22
Company Subsidiary is involved in or, to the Knowledge of Company, threatened
with, any labor dispute, grievance, or litigation relating to labor, safety or
discrimination matters involving any employee, including without limitation
charges of unfair labor practices or discrimination complaints, that, if
adversely determined, would reasonably be expected to result in material
liability to Company. Neither Company nor any Company Subsidiary has engaged in
any unfair labor practices within the meaning of the National Labor Relations
Act that would reasonably be expected to result in material liability to
Company. Neither Company nor any Company Subsidiary is presently, nor has it
been in the past, a party to or bound by any collective bargaining agreement or
union contract with respect to employees other than as set forth in Section
2.17(c) of the Company Disclosure Schedule and no collective bargaining
agreement is being negotiated by Company or any Company Subsidiary. No union
organizing campaign or activity with respect to non-union employees of Company
or any Company Subsidiary is ongoing, pending or, to the Knowledge of Company,
threatened.
2.18 ENVIRONMENTAL MATTERS.
(a) Neither Company nor any of the Company Subsidiaries has
violated, is in violation of, or has been notified that it is in violation of
any Environmental Law (as defined in Section 2.18(e)(i)), and except in full
compliance with Environmental Laws, neither Company nor any of the Company
Subsidiaries (nor, to the Knowledge of Company, any predecessor in interest in
connection with the business of Company or the Company Subsidiaries) has
generated, used, handled, transported or stored any Hazardous Materials (as
defined in Section 2.18(e)(ii)) or shipped any Hazardous Materials for
treatment, storage or disposal at any other site or facility. There has been no
generation, use, handling, storage or disposal of any Hazardous Materials in
violation of any Environmental Law at any site owned or operated by, or premises
leased by, Company or any of the Company Subsidiaries (or, to the Knowledge of
Company, any predecessor in interest in connection with the business of Company
or the Company Subsidiaries) during the period of Company's or such Company
Subsidiary's (or predecessor in interest's) ownership, operation or lease or, to
the Knowledge of Company, prior thereto, nor has there been or is there
threatened any Release (as defined in Section 2.18(e)(iii) of any Hazardous
Materials into, on, at, under or from any such site or premises during such
period or, to the Company's Knowledge, prior thereto, in violation of any
Environmental Law or which created or would, if discovered, create an obligation
to report or respond in any way to such Release or would create any liability
for Company or the Company Subsidiary. There is no underground storage tank or
other container at any site owned or operated by, or premises leased by Company
or any Company Subsidiary or, to the Knowledge of the Company, on any site
formerly owned or operated by, or premises formerly leased by, Company or any
Company Subsidiary.
(b) Neither Company nor any Company Subsidiary has received
notification in any form that any site currently or formerly owned or operated
by, or premises currently or formerly leased by, Company or any Company
Subsidiary (or, to the Knowledge of Company, predecessor in interest in
connection with the business of Company or any Company Subsidiary) that is the
subject of any Federal, state or local civil, criminal or administrative
investigation evaluating whether, or alleging that, any action is necessary to
respond to a Release or a threatened Release of any Hazardous Material. No such
site or premises is listed, or to the Knowledge of Company, proposed for
listing, on the National Priorities List or the
23
Comprehensive Environmental Response, Compensation, and Liability Information
System, both as maintained under the Federal Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), or on any comparable state
or local governmental lists. Neither Company nor any Company Subsidiary has
received written notification of, and to the Knowledge of Company there is not,
any potential responsibility or liability of Company or any Company Subsidiary
pursuant to the provisions of (i) CERCLA, (ii) any similar Federal, state,
local, foreign or other Environmental Law, or (iii) any order issued pursuant to
the provisions of any such Environmental Law.
(c) Company and the Company Subsidiaries have obtained all permits
required by Environmental Law necessary to enable them to conduct their
respective businesses and are in compliance in all material respects with such
permits. All such permits are in full force and effect and there are no pending
(and, to the Knowledge of Company, no threatened) proceedings that seek the
revocation, cancellation, suspension or any adverse modification of any such
permits.
(d) There is no environmental or health and safety matter that
reasonably would be expected to have a Company Material Adverse Effect. Company
previously has furnished or made available to Parent true and complete copies of
any and all environmental audits or risk assessments, site assessments,
documentation regarding shipment of Hazardous Materials, permits required under
Environmental Laws, planning and reporting documents created under Environmental
Laws, and all other material correspondence, documents or communications in
Company's possession relating to compliance with Environmental Laws, management
of Hazardous Materials, or the environmental condition of properties presently
or formerly owned, operated, or leased in connection with the business of
Company or any Company Subsidiaries (or any predecessor in interest in
connection with the business of Company or any Company Subsidiary).
(e) For purposes of this Agreement:
(i) "Environmental Laws" means any Federal, state, local or
foreign laws (including common law), regulations, codes, rules, orders,
ordinances, permits, requirements and final governmental determinations, in each
case as amended and in effect on the date of this Agreement in the jurisdiction
in which the applicable site or premises are located, pertaining to the
protection of human health, safety or the environment, including without
limitation, the following statutes and all regulations promulgated thereunder:
the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. Section 9601 et seq.; the Emergency Planning and Community Right-to-Know
Act, 42 U.S.C. Section 11001 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. Section 1251 et seq.; the Federal Clean Air Act, 42 U.S.C. Section 7401
et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section 136 et seq.; the Toxic Substance Control Act, 15 U.S.C. Section 2601 et
seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section 1801 et
seq.; the Atomic Energy Act, 42 U.S.C. Section 2014 et seq.; the Occupational
Safety and Health Act, as amended, 29 U.S.C. Section 651 et seq.; the Federal
Food, Drug and Cosmetic Act, as amended, 21 U.S.C. Section 301 et seq. (insofar
as it regulates employee exposure to Hazardous Materials); any state or local
statute of similar effect; and any laws relating to protection of safety, health
or the environment which regulate the use of biological agents or substances
including medical or infectious wastes;
24
(ii) "Hazardous Materials" means (A) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "chemical substances,"
"toxic substances," "toxic pollutants," "pollutants," "contaminants,"
"pesticides," or "oil" or related materials as defined in any applicable
Environmental Law, or (B) any petroleum or petroleum products, oil, natural or
synthetic gas, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls, urea formaldehyde foam insulation, radon and any
other substance defined or designated as hazardous, toxic or harmful to human
health, safety or the environment under any Environmental Law; and
(iii) "Release" has the meaning specified in CERCLA.
2.19 NO BREACH. Except for (a) filings with the SEC under the Exchange
Act, (b) filings with the Secretary of State of
Delaware contemplated herein,
(c) the filing of a Notification and Report Form under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act, as amended (the "HSR Act") and any similar filings
in foreign jurisdictions and (d) matters listed in Section 2.19 of the Company
Disclosure Schedule, the execution, delivery and performance of this Agreement
by Company and the consummation by Company of the transactions contemplated
hereby will not (i) violate any provision of the Certificate of Incorporation or
By-Laws of Company, (ii) violate, conflict with or result in the breach of any
of the terms or conditions of, result in modification of, or otherwise give any
other contracting party the right to terminate, accelerate obligations under or
receive payment under or constitute (or with notice or lapse of time or both
constitute) a default under, any instrument, contract or other agreement to
which Company or any Company Subsidiary is a party or to which any of them or
any of their assets or properties is bound or subject, (iii) violate any law,
ordinance or regulation or any order, judgment, injunction, decree or other
requirement of any court, arbitrator or governmental or regulatory body
applicable to Company or the Company Subsidiaries or by which any of Company's
or the Company Subsidiaries' assets or properties is bound, (iv) violate any
Permit, (v) require any filing with, notice to, or permit, consent or approval
of, any governmental or regulatory body, or (vi) result in the creation of any
lien or other encumbrance on the assets or properties of Company or a Company
Subsidiary, excluding from the foregoing clauses (ii), (iii), (iv), (v), and
(vi) violations, breaches and defaults which, and filings, notices, permits,
consents and approvals the absence of which, in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect and would not
materially interfere with the ability of Company to consummate the transactions
contemplated hereby or increase the costs of consummation of the Mergers in an
amount that is material in comparison to the Merger Consideration. Except as set
forth in Section 2.19 of the Company Disclosure Schedule, neither Company nor
any Company Subsidiary is or will be required to give any notice to or obtain
any consent or waiver from, any individual or entity in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby other than failures which would not result in any material
modification or termination of, or a material payment or default under, such
agreement. The failure to obtain a consent or waiver with respect to any of the
Select Agreements or any material agreement referenced in, or listed as an
exhibit to, any Company SEC Report filed in the last twelve months shall be
deemed to have a Company Material Adverse Effect.
25
2.20 BOARD APPROVALS.
(a) The Company Board of Directors, as of the date of this
Agreement, has determined (i) that the First Merger and the Second Merger are
fair to, and in the best interests of, Company and its stockholders, (ii) to
propose this Agreement for adoption by Company's stockholders and to declare the
advisability of this Agreement, and (iii) to recommend that the stockholders of
Company adopt this Agreement.
(b) Company has taken all action necessary such that no restrictions
contained in any "fair price," "control share acquisition," "business
combination" or similar statute (including Section 203 of the DGCL) will apply
to the execution, delivery or performance of this Agreement.
(c) Company has amended its Rights Agreement dated April 10, 2001
between Company and American Stock Transfer & Trust Company (the "Company Rights
Plan") so as to provide that (i) (A) Parent will not become an "Acquiring
Person" and (B) no "Shares Acquisition Date" or "Distribution Date" (as such
terms are defined in the Company Rights Plan) will occur, in each case, as a
result of the approval, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) the Company Rights
Plan will terminate immediately prior to the Effective Time.
2.21 FINANCIAL ADVISOR.
(a) The Company Board of Directors has received the oral opinion of
UBS Securities LLC to the effect that, as of the date of this Agreement, the Per
Share Stock Consideration is fair, from a financial point of view, to the
holders of Company Common Stock. Company will forward to Parent a copy of the
written version of such opinion, solely for informational purposes, promptly
following receipt and in no event later than two business days after the date of
this Agreement.
(b) Other than UBS Securities LLC, no broker, finder, agent or
similar intermediary has acted on behalf of Company in connection with this
Agreement or the transactions contemplated hereby, and there are no brokerage
commissions, finders' fees or similar fees or commissions payable in connection
herewith based on any agreement, arrangement or understanding with Company, or
any action taken by Company. Company previously has provided Parent with a copy
of UBS Securities LLC's engagement letter, and the fees set forth therein are
the only fees payable to UBS.
2.22 PROXY STATEMENT AND REGISTRATION STATEMENT. None of the information
supplied or to be supplied by Company for inclusion or incorporation by
reference in the registration statement on Form S-4 to be filed with the SEC in
connection with the issuance of shares of Parent Common Stock in the First
Merger (the "Registration Statement") will, at the time the Registration
Statement is filed with the SEC, at any time it is amended or supplemented or at
the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. None
of the information supplied or to be supplied by Company for inclusion or
incorporation by reference in the proxy statement/prospectus included in the
Registration Statement (the "Proxy Statement/Prospectus"), on the date it is
first mailed to
26
holders of Company Common Stock, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Proxy Statement/Prospectus will
comply as to form in all material respects with the requirements of the Exchange
Act and the Securities Act and the rules and regulations of the SEC thereunder.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth on the disclosure schedule delivered by Parent to
Company on the date hereof (the "Parent Disclosure Schedule"), the section
numbers of which are numbered to correspond to the section numbers of this
Agreement to which they refer, Parent hereby makes the following representations
and warranties to Company:
3.1 ORGANIZATION AND QUALIFICATION. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has corporate power and authority to own,
lease and operate its assets and to carry on its business as now being and as
heretofore conducted. Parent is qualified to transact business as a foreign
corporation in all jurisdictions in which such qualification or authorization is
required by law, except for jurisdictions in which the failure to be so
qualified or authorized would not reasonably be expected to have a Parent
Material Adverse Effect. "Parent Material Adverse Effect" shall mean a material
adverse effect on the assets, properties, business, results of operations or
financial condition of Parent and its subsidiaries, taken as a whole (a "Parent
Material Adverse Effect"); provided, however, a "Parent Material Adverse Effect"
shall not include any adverse effect primarily related to (i) Parent's acts or
omissions required by the terms of this Agreement, (ii) the economy or
securities markets of the United States or any other region in general, without
a disproportionate impact on Parent and its subsidiaries, (iii) conditions
affecting the biotechnology and biopharmaceutical industries generally, without
a disproportionate impact on Parent and its subsidiaries, or (iv) a decline in
the price of Parent Common Stock.
3.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT. Parent has the corporate
power and authority to enter into, execute and deliver this Agreement and to
perform fully its obligations hereunder and the transactions contemplated
hereby. The Parent's Board of Directors has approved this Agreement. No approval
by Parent's stockholders is required to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Parent and
constitutes a valid and binding obligation, enforceable against it in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or affecting
creditors generally or by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
3.3 CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of Parent consists of 690,000,000 shares of common stock ("Genzyme
Common Stock") and 10,000,000 shares of preferred stock, $0.01 par value per
share ("Parent Preferred Stock"). Of the Genzyme Common Stock, as of the date of
this Agreement, 500,000,000 shares have been designated Genzyme General Division
Common Stock ("Parent Common Stock"), 100,000,000 shares have been designated
Genzyme Biosurgery Division Common Stock ("GBX Common Stock"), 40,000,000 shares
have been designated Genzyme Molecular Oncology Division
27
Common Stock, $0.01 par value per share ("GMO Common Stock") and 50,000,000
shares have been undesignated as to series. As of January 31, 2004, 225,720,271
shares of Parent Common Stock were issued and outstanding, and no shares of GBX
Common Stock or GMO Common Stock were issued and outstanding. As of the date of
this Agreement, no shares of Parent Preferred Stock are outstanding. All issued
and outstanding shares of Parent Common Stock are validly issued, fully paid,
non-assessable and free of preemptive rights.
3.4 SEC REPORTS. Parent previously has made available to Company (i) its
Annual Report on Form 10-K for the year ended December 31, 2002 ("Parent 10-K"),
(ii) all proxy statements relating to Parent's meetings of stockholders held
since January 1, 2003 and (iii) all other documents filed by Parent with the SEC
under the Exchange Act on and since January 1, 2003 (together with the documents
filed by Parent with the SEC under the Exchange Act prior to the Effective Time,
the "Parent SEC Reports"). As of their respective dates or, if amended, as of
the date of the most recent amendment, such documents complied, and all
documents filed by Parent with the SEC under the Exchange Act between the date
of this Agreement and the Closing Date will comply, in all material respects,
with applicable SEC requirements and did not, and in the case of documents filed
on or after the date hereof will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The parties agree that the failure of the Parent's
chief executive officer or chief financial officer to provide an unqualified
certification in any certification required to be filed with any document filed
with the SEC between the date of this Agreement and the Closing Date will
constitute an event that has a Parent Material Adverse Effect.
3.5 FINANCIAL STATEMENTS. Parent's consolidated financial statements
contained in the Parent 10-K and Parent's Quarterly Report on Form 10-Q for the
quarter ending September 30, 2003 have, in all material respects, been prepared
from, and are in accordance with, the books and records of Parent and fairly
present the consolidated financial condition, results of operations and cash
flows of Parent and its consolidated subsidiaries as of and for the periods
presented therein, all in accordance with generally accepted accounting
principles applied on a consistent basis, except as otherwise indicated therein
or in Parent's Form 8-K dated December 4, 2003 and subject, in the case of the
unaudited financial statements, to normal year-end and audit adjustments, which
in the aggregate are not material, and the absence of footnote disclosures.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the
Parent SEC Reports, as at December 31, 2002, Parent had no material liabilities
of any nature, whether accrued, absolute, contingent or otherwise (including,
without limitation, liabilities as guarantor or otherwise with respect to
obligations of others or liabilities for taxes due or then accrued or to become
due), required to be reflected or disclosed in the balance sheet dated December
31, 2002 (or the notes thereto) in the Parent 10-K that were not adequately
reflected or reserved against on such balance sheet. Except as disclosed in the
Parent SEC Reports, Parent has no such liabilities, other than liabilities (i)
adequately reflected or reserved against on such balance sheet, (ii) reflected
in Parent's unaudited consolidated balance sheet (or the notes thereto) dated
September 30, 2003, (iii) incurred since September 30, 2003 in the ordinary
course of business or (iv) that would not, in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
28
3.7 ABSENCE OF ADVERSE CHANGES. Since September 30, 2003, except as
disclosed in the Parent SEC Reports, there has not been any event, change or
circumstance that has had a Parent Material Adverse Effect.
3.8 ACTIONS AND PROCEEDINGS. Except as set forth in the Parent SEC
Reports, there are no actions, suits or claims or legal, administrative or
arbitration proceedings pending or, to the best knowledge of Parent, threatened
against Parent that individually or in the aggregate would reasonably be
expected to have a Parent Material Adverse Effect or materially interfere with
Parent's ability to consummate the transactions contemplated hereby. To the
knowledge of Parent, except as disclosed in the Parent SEC Reports, there is no
fact, event or circumstance now in existence that reasonably would be expected
to give rise to any suit, action, claim, investigation or proceeding that,
individually or in the aggregate, would reasonably be expected to have a Parent
Material Adverse Effect or materially interfere with Parent's ability to
consummate the transactions contemplated hereby.
3.9 INTELLECTUAL PROPERTY. Parent owns or is licensed to use, or
otherwise has the right to use, all patents, trademarks, servicemarks,
tradenames, trade secrets, franchises and copyrights, and all applications for
any of the foregoing, and all technology, know-how and processes necessary for
the conduct of Parent's business except (a) to the extent failure to have such
ownership or licenses would not reasonably be expected to have a Parent Material
Adverse Effect or (b) as disclosed in the Parent SEC Reports.
3.10 NO BREACH. Except for (a) filings under the Securities Act, (b)
filings under the Exchange Act, (c) filings with the Secretary of State of
Delaware and the Secretary of the Commonwealth of Massachusetts, (d) the filing
of a Notification and Report Form under the HSR Act and any similar filings in
foreign jurisdictions, (e) consents and waivers under Parent's credit agreements
and debt instruments and (f) the matters listed in Section 3.10 of the Parent
Disclosure Schedule, the delivery and performance of this Agreement by Parent
and consummation by it of the transactions contemplated hereby will not (i)
violate any provision of the charter or by-laws of Parent, (ii) violate,
conflict with or result in the breach of any of the terms or conditions of,
result in modification of, or otherwise give any other contracting party the
right to terminate or accelerate obligations under, or constitute (or with
notice or lapse of time or both constitute) a default under, any material
instrument, contract or other agreement to which Parent is party or to which it
or any of its assets or properties is bound or subject, (iii) violate any law,
ordinance or regulation or any order, judgment, injunction, decree or
requirement of any court, arbitrator or governmental or regulatory body
applicable to Parent or by which any of its assets or properties is bound, (iv)
require any filing with, notice to, or permit, consent or approval of, any
governmental or regulatory body or (v) result in the creation of any lien or
other encumbrance on the assets or properties of Parent, excluding from the
foregoing clauses (ii), (iii), (iv) and (v) violations, breaches and defaults
which, and filings, notices, permits, consents and approvals the absence of
which, in the aggregate, will not materially interfere with Parent's ability to
consummate the transactions contemplated hereby.
3.11 PROXY STATEMENT AND REGISTRATION STATEMENT. None of the information
supplied or to be supplied by Parent for inclusion in the Registration Statement
will, at the time the Registration Statement is filed with the SEC, at any time
it is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
29
statements therein not misleading. None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in the Proxy
Statement/Prospectus will, on the date it is first mailed to holders of Company
Common Stock, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
3.12 LLC.
(a) LLC is duly formed as a Delaware limited liability company.
(b) All member interests in LLC are owned by Parent.
(c) LLC has been formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and, prior to the effective time of
the Second Merger, will not have engaged in any other business activities.
3.13 SUB.
(a) Sub is duly organized, validly existing and in good standing as
a Delaware corporation.
(b) All of the capital stock of Sub at the Effective Time will be
duly authorized, validly issued, fully paid and nonassessable and owned of
record and beneficially by Parent.
(c) Sub has been formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and, prior to the Effective Time,
will not have engaged in any other business activities.
SECTION 4 - COVENANTS AND AGREEMENTS
4.1 CONDUCT OF BUSINESS. Except with the prior written consent of Parent
and except as explicitly contemplated herein or referred to in Section 4.1 of
the Company Disclosure Schedule, during the period from the date hereof to the
effective time of the Second Merger, Company shall observe the following
covenants:
(a) AFFIRMATIVE COVENANTS PENDING CLOSING. Company shall:
(i) PRESERVATION OF PERSONNEL. Use reasonable commercial
efforts to preserve intact and keep available the services of present key
employees of Company and the Company Subsidiaries;
(ii) INSURANCE. Use reasonable commercial efforts to keep in
effect casualty, public liability, workers' compensation and other insurance
policies in coverage amounts substantially similar to those in effect at the
date of this Agreement;
(iii) PRESERVATION OF THE BUSINESS; MAINTENANCE OF PROPERTIES,
CONTRACTS. Use reasonable commercial efforts to preserve the business of
Company, to develop,
30
commercialize and pursue regulatory approvals for Company's product candidates
and products and to advertise, promote and market Company's products, to keep
Company's properties substantially intact, to preserve its goodwill and
business, to maintain all physical properties in such operating condition as
will permit the conduct of Company's business on a basis consistent with past
practice, and to perform and comply in all material respects with the terms of
the contracts referred to in Section 2.11.
(iv) INTELLECTUAL PROPERTY RIGHTS. Use reasonable best
efforts to preserve and protect the Proprietary Rights;
(v) ORDINARY COURSE OF BUSINESS. Operate Company's business
in the ordinary course consistent with past practices;
(vi) COMPANY OPTIONS. Take all reasonable actions necessary
with respect to Company Options to effectuate the terms of this Agreement,
provided, however, that Parent shall have the right to approve any agreements to
modify material terms of the underlying instruments; and
(vii) FDA MATTERS. Notify and consult with Parent promptly (A)
after receipt of any material communication from the FDA or inspections of any
manufacturing or clinical trial site and before giving any material submission
to the FDA, and (B) prior to making any material change to a study protocol, the
addition of new trials, any material change to a manufacturing plan or process,
or a material change to the development timeline for any of its product
candidates or programs.
(b) NEGATIVE COVENANTS PENDING CLOSING. Company shall not:
(i) DISPOSITION OF ASSETS. Sell or transfer, or mortgage,
pledge, lease, license or otherwise encumber any of its assets, including its
Proprietary Rights, other than sales or transfers in the ordinary course of
business and in amounts not exceeding, in the aggregate, $250,000;
(ii) LIABILITIES. Incur any indebtedness for borrowed money
in excess of $500,000 in the aggregate or incur any obligation or liability or
enter into any contract or commitment involving potential payments to or by
Company or any Company Subsidiary, other than in the ordinary course of business
consistent with industry practice, in an amount aggregating in excess of
$500,000;
(iii) COMPENSATION. Change the compensation payable to any
officer, director, employee, agent or consultant, or enter into any employment,
severance, retention or other agreement or arrangement with any officer,
director, employee, agent or consultant of Company or a Company Subsidiary, or
adopt, or increase the benefits (including fringe benefits) under, any employee
benefit plan or otherwise, except (A), in each case, as required by law or in
accordance with existing agreements disclosed in the Company Disclosure Schedule
and (B), in the case of compensation for employees, agents or consultants who
are not executive officers or directors, in the ordinary course of business
consistent with past practice; or make any loans to any of its directors,
officers or employees, agents or consultants, or make any change in its
31
existing borrowing or lending arrangements for or on behalf of any such persons
pursuant to an employee benefit plan or otherwise;
(iv) CAPITAL STOCK. Make any change in the number of shares
of its capital stock authorized, issued or outstanding or grant or accelerate
the exercisability of any option, warrant or other right to purchase, or convert
any obligation into, shares of its capital stock, declare or pay any dividend or
other distribution with respect to any shares of its capital stock, sell or
transfer any shares of its capital stock, or redeem or otherwise repurchase any
shares of its capital stock, except upon the exercise of convertible securities
outstanding on the date of this Agreement and disclosed herein or granted after
the date of this Agreement in the ordinary course of business consistent with
past practice;
(v) CHARTER, BY-LAWS, DIRECTORS AND OFFICERS. Cause, permit
or propose any amendments to the Certificate of Incorporation or By-laws of
Company or elect or appoint any new directors or officers;
(vi) ACQUISITIONS. Make, or permit to be made, any material
acquisition, lease, investment, or capital contribution outside the ordinary
course of business consistent with past practice;
(vii) CAPITAL EXPENDITURES. Authorize any single capital
expenditure in excess of $250,000 or capital expenditures which in the aggregate
exceed $500,000;
(viii) ACCOUNTING POLICIES. Except as may be required as a
result of a change in law or in generally accepted accounting principles, change
any of the accounting practices or principles used by it or restate, or become
obligated to restate, the financial statements included in the Company 10-K or
Company 10-Q;
(ix) TAX TREATMENT. Take, or permit any of the Company
Subsidiaries to take, any action that would prevent the Mergers from qualifying
as a single reorganization within the meaning of Section 368(a) of the Code;
(x) TAXES. Make any Tax election or settle or compromise any
material Federal, state, local or foreign Tax liability, change annual tax
accounting period, change any method of Tax accounting, enter into any closing
agreement relating to any Tax, surrender any right to claim a Tax refund, or
consent to any extension or waiver of the limitations period applicable to any
Tax claim or assessment;
(xi) LEGAL. Commence, settle or compromise any pending or
threatened suit, action or claim which (A) is material to Company or any Company
Subsidiary or which relates to the transactions contemplated hereby, (B) would
involve material restrictions on the business activities of Company or any
Company Subsidiary, or (C) would involve the issuance of Company securities;
(xii) EXTRAORDINARY TRANSACTIONS. Adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of Company or any of the Company
Subsidiaries (other than the Mergers);
32
(xiii) PAYMENT OF INDEBTEDNESS. Pay, discharge or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business and consistent with past
practice, of liabilities reflected or reserved against in the balance sheet
included in the Company 10-Q or incurred in the ordinary course of business;
(xiv) WARN ACT. Effectuate a "plant closing" or "mass layoff,"
as those terms are defined in the Worker Adjustment and Retraining Notification
Act of 1988 or effectuate any similar action under any foreign law;
(xv) RIGHTS PLAN. Amend, modify or waive any provisions of
the Company Rights Plan, or take any action to redeem the Rights or render the
Rights inapplicable to any transaction other than the Mergers;
(xvi) NEW AGREEMENTS/AMENDMENTS. Enter into or materially
modify, or permit a Company Subsidiary to enter into or materially modify, any
material license, development, research, or collaboration agreement, lease or
other contract with any other person or entity;
(xvii) CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS. Modify,
amend or terminate, or waive, release or assign any material rights or claims
with respect to any material confidentiality agreement or non-competition
agreement to which Company is a party; or
(xviii) OBLIGATIONS. Obligate itself to do any of the foregoing.
(c) CONTROL OF COMPANY'S BUSINESS. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct Company's operations prior to the Effective Time. Prior to the Effective
Time, Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.
4.2 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Effective
Time, Parent shall be entitled, through its employees and representatives, to
have such access to the assets, properties, business and operations of Company
as is reasonably necessary or appropriate in connection with Parent's
investigation of Company with respect to the transactions contemplated hereby.
Any such investigation and examination shall be conducted at reasonable times
during business hours upon reasonable advance notice and under reasonable
circumstances so as to minimize any disruption to or impairment of Company's
business and Company shall cooperate fully therein. No investigation by Parent
shall diminish or obviate any of the representations, warranties, covenants or
agreements of Company contained in this Agreement. In order that Parent may have
full opportunity to make such investigation, Company shall furnish the
representatives of Parent during such period with all such information and
copies of such documents concerning the affairs of Company as such
representatives may reasonably request and cause its officers, employees,
consultants, agents, accountants and attorneys to cooperate fully with such
representatives in connection with such investigation. The information and
documents so provided shall be subject to the terms of the Confidentiality
Agreement (as defined in Section 4.10).
33
4.3 EXPENSES. Company and Parent shall bear their respective expenses
incurred in connection with the preparation, execution and performance of this
Agreement and the transactions contemplated hereby, including without
limitation, all fees and expenses of agents, representatives, counsel and
accountants, except that each of Parent and Company shall bear and pay one-half
of the costs and expenses incurred in connection with the filing, printing and
mailing of the Registration Statement and the Prospectus/Proxy Statement.
Notwithstanding the foregoing, Company shall reimburse Parent for Parent's
expenses within three (3) business days of receipt of an invoice for such
expenses if this Agreement is (i) terminated under circumstances which require
the payment of the Fee under Section 8.3(a) or (ii) terminated under 8.1(e) in a
circumstance in which the Fee under Section 8.3(a) is not payable. Under no
circumstances will Company reimburse Parent for expenses in excess of $2.5
million.
4.4 AUTHORIZATION FROM OTHERS. Prior to the Closing Date, the parties
shall use reasonable commercial efforts to obtain all authorizations, consents
and Permits of others, necessary or desirable to permit the consummation of the
Mergers on the terms contemplated by this Agreement. Promptly following the
execution and delivery of this Agreement, Company shall provide all notices
contemplated under material contracts, including any notices under any of the
Select Agreements, except where failure to provide such notice would not result
in termination or material modification of the agreement or a material liability
under the agreement, and shall notify Parent when each applicable notice period
has expired.
4.5 FURTHER ASSURANCES. Each of the parties shall execute such
documents, further instruments of transfer and assignment and other papers and
take such further actions as may be reasonably required or desirable to carry
out the provisions hereof and the transactions contemplated hereby, including
delivering customary representation letters contemplated by Sections 6.5 and
7.2. Each party shall use reasonable commercial efforts to take other such
actions to ensure that, to the extent within its control or capable of influence
by it, the transactions contemplated by this Agreement shall be fully carried
out in a timely fashion, including preparing and filing any documents required
to be prepared and filed under the Exchange Act. Without limiting the generality
of the foregoing, Company agrees to duly execute and deliver, and to use its
reasonable commercial efforts to cause any individual or entity listed as a
co-owner of, or who otherwise has any power of attorney or other rights with
respect to, any of the Proprietary Rights, to duly execute and deliver such
further instruments and do and cause to be done such further actions and things,
including, without limitation, the execution of such additional assignments,
agreements, documents and instruments, that Parent may at any time and from time
to time reasonably request to more effectively transfer ownership, control
and/or administration of such Proprietary Rights to the First Surviving Entity
or the Second Surviving Entity. Nothing in this Agreement shall require Parent,
Sub or LLC to sell, hold separate, license or otherwise dispose of or conduct
their business in a specified manner, or agree to sell, hold separate, license
or otherwise dispose of or conduct their business in a specified manner, or
permit the sale, holding separate, licensing or other disposition of, any assets
of Parent, the First Surviving Entity, or the Second Surviving Entity, whether
as a condition to obtaining any approval from a governmental entity or any other
person or for any other reason. Company shall deliver to Parent the
organizational documents and minute books of Company and Company Subsidiaries
promptly after the Closing.
34
4.6 PREPARATION OF DISCLOSURE DOCUMENTS.
(a) As soon as practical following the date of this Agreement,
Company and Parent shall prepare the Proxy Statement/Prospectus. Company shall,
in cooperation with Parent, file the Proxy Statement/Prospectus with the SEC as
its preliminary proxy statement and Parent shall, in cooperation with Company,
prepare and file with the SEC the Registration Statement, in which the Proxy
Statement/Prospectus will be included. Each of Company and Parent shall use
reasonable commercial efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing
and to keep the Registration Statement effective as long as is necessary to
consummate the First Merger. Company shall mail the Proxy Statement/Prospectus
to its stockholders as promptly as practicable after the Registration Statement
is declared effective under the Securities Act and, if necessary, after the
Proxy Statement/Prospectus shall have been so mailed, promptly circulate
supplemental or amended proxy material, and, if required in connection
therewith, resolicit proxies.
(b) (i) Company shall, as soon as practicable following the date
the Registration Statement is declared effective, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company Stockholders
Meeting") for the purpose of obtaining the required stockholder votes with
respect to this Agreement, (ii) the Board of Directors of Company, unless
otherwise required pursuant to the applicable fiduciary duties of the Board of
Directors of Company to the stockholders of Company (as determined in good faith
by the Board of Directors of Company after consulting with outside counsel),
shall give its unqualified recommendation that its stockholders adopt this
Agreement and (iii) Company shall take all lawful action to solicit such
adoption. No withdrawal, modification, change or qualification in the
recommendation of the Board of Directors of Company (or any committee of the
Board of Directors of Company) shall change the approval of the Board of
Directors of Company for purposes of causing any state takeover statute or other
state law to be inapplicable to the transactions contemplated hereby, or change
the obligation of Company to present the
Merger Agreement for adoption at the
Company Stockholders Meeting. Company agrees to give Parent written notice at
least 24 hours prior to publicly indicating any withdrawal, modification, change
or qualification in the recommendation of the Board of Directors of Company;
provided, however, that no such advance notice shall be required prior to such a
public indication within ten (10) days of the date scheduled for the Company
Stockholders Meeting in the Proxy Statement/Prospectus.
(c) Except as required by law, no amendment or supplement to the
Proxy Statement/Prospectus or the Registration Statement shall be made by Parent
or Company without the approval of the other party (which shall not be
unreasonably withheld or delayed). Each party shall advise the other party,
promptly after it receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been filed, of
the issuance of any stop order by the SEC, or of any request by the SEC for
amendment of the Proxy Statement/Prospectus or the Registration Statement or
comments thereon and responses thereto or requests by the SEC for additional
information.
(d) Company shall use reasonable commercial efforts to cause to be
delivered to Parent's Board of Directors a letter from Company's independent
public accountants, dated the date on which the Registration Statement shall
become effective, addressed to Company,
35
Parent and Parent's Board of Directors, in form and substance reasonably
satisfactory to Parent and customary in scope and substance for comfort letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement.
4.7 PUBLIC ANNOUNCEMENTS. Company shall consult with Parent, and Parent
shall consult with Company, and each shall get the approval of the other (which
shall not be unreasonably withheld or delayed), before issuing any press release
or otherwise making any public statement with respect to the Mergers or this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation and approval, except as may be required by
law. Notwithstanding the foregoing, without prior consultation, each party (a)
may communicate with stockholders, financial analysts and media representatives
in a manner consistent with its past practice and (b) may disseminate material
substantially similar to material included in a press release or other document
previously approved for external use by the other party. Each party agrees to
promptly make available to the other party copies of any written communications
made without prior consultation.
4.8 AFFILIATE LETTERS. Company shall identify to Parent all persons who
Company believes may be "affiliates" of Company within the meaning of Rule 145
under the Securities Act. Company shall use reasonable commercial efforts to
provide Parent with such information as Parent shall reasonably request for
purposes of making its own determination of persons who may be deemed to be
affiliates of Company. Company shall use reasonable commercial efforts to
deliver to Parent a letter from each of such affiliates identified by Company
and Parent in substantially the form attached hereto as Exhibit C (the
"Affiliate Letters") as soon as practicable after the date hereof but in no
event later than the day preceding the filing of the Registration Statement.
4.9 NASDAQ LISTINGS. Prior to the Closing Date, if required under the
rules of The NASDAQ Stock Market, Parent shall file with The NASDAQ Stock Market
a Notification for Listing of Additional Shares covering the shares of Parent
Common Stock that Parent reasonably expects, at the time of such filing, to be
issued in the First Merger. Prior to the Closing Date, Company shall take such
actions as are necessary so that trading of Company Common Stock on the NASDAQ
National Market ceases at the close of regular trading on the trading day on
which the Effective Time is expected to occur or if the Effective Time is not
expected to occur on a trading day, the immediately preceding trading day.
4.10 NO SOLICITATION. Company shall not, and shall cause each Company
Subsidiary and each director, officer, employee, agent or other representative
(including each financial advisor and attorney) of Company and each Company
Subsidiary not to, (a) solicit, initiate, facilitate, assist or encourage action
by, or discussions with, any person, other than Parent, relating to the possible
acquisition of Company or any Company Subsidiary or of all or a material portion
of the assets or capital stock of Company or any Company Subsidiary or any
merger, reorganization, consolidation, business combination, share exchange,
tender offer, recapitalization, dissolution, liquidation or similar transaction
involving Company or any Company Subsidiary (an "Alternative Transaction"), (b)
participate in any negotiations regarding, or furnish information with respect
to, any effort or attempt by any person to do or to seek any Alternative
Transaction or (c) grant any waiver or release under any standstill or similar
agreement. Notwithstanding the foregoing, Company and the Board of Directors of
Company shall be permitted (i) to comply with Rule 14e-2(a) under the Exchange
Act with regard to an
36
Alternative Transaction (to the extent applicable) and (ii) prior to the date on
which the stockholders of Company adopt this Agreement, to engage in discussions
or negotiations with, or provide information to, a person who makes an
unsolicited BONA FIDE written proposal for an Alternative Transaction if (and
only if) (A) Company is not in breach of its obligations under this Section
4.10, (B) the Board of Directors of Company concludes in good faith (after
consultation with its outside legal counsel and financial advisor) that the
proposal is reasonably likely to lead to an Alternative Transaction more
favorable for Company's stockholders than the Mergers (including adjustment to
the terms and conditions proposed by Parent in response to the proposal for the
Alternative Transaction), (C) the Board of Directors of Company concludes in
good faith (after consultation with its outside legal counsel, who may be
Company's regularly engaged legal counsel) that engaging in such negotiations or
discussions or providing such information is necessary for the Board of
Directors of Company to comply with the directors' fiduciary duties under
Delaware law and (D) prior to providing any information or data, the recipient
delivers to Company an executed confidentiality agreement with terms no less
favorable to Company than those contained in the Mutual Confidential Disclosure
Agreement dated as of July 23, 2003 (as amended, the "Confidentiality
Agreement") between Parent and Company related to a potential business
combination transaction. Company shall notify Parent promptly (and, in any case,
within 24 hours) of any inquiries, proposals or offers received by, any
information requested from, and any discussions or negotiations sought to be
initiated or continued with, it, any Company Subsidiary or any of their
directors, officers, employees, agents or other representatives concerning an
Alternative Transaction, indicating, in connection with such notice, the names
of the parties and the material terms and conditions of any proposals or offers
and, in the case of written materials, providing copies of such materials unless
such information or materials constitute confidential information of the other
party under a confidentiality agreement effective on the date of this Agreement,
in which case versions will be provided redacted to the minimum extent possible.
Company agrees that it shall keep Parent informed, on a reasonably prompt basis
(and, in any case, within 24 hours of any significant development), of the
status and terms of any such proposals or offers and the status of any such
discussions or negotiations. Company agrees that it shall cease and cause to be
terminated any existing activities, discussions or negotiations with respect to
any potential Alternative Transaction or similar transaction or arrangement and
request the return or destruction of all confidential information regarding
Company, any Company Subsidiary, or any of it or their products, product
candidates, or businesses previously provided in connection with such
activities, discussions or negotiations. Company agrees that it shall take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence of this Section 4.10 of the obligations undertaken in this
Section 4.10.
4.11 REGULATORY FILINGS. As soon as is reasonably practicable, Company
and Parent each shall file with the United States Federal Trade Commission (the
"FTC") and the Antitrust Division of the United States Department of Justice
(the "DOJ") any Notification and Report Forms relating to the Mergers required
by the HSR Act, as well as comparable pre-merger notification forms required by
the merger notification and control laws and regulations of any other applicable
jurisdiction, as agreed to by the parties. Company and Parent each shall
promptly (a) supply the other with any information which may be reasonably
required in order to make such filings and (b) supply any additional information
which may be requested by the FTC, the DOJ or the competition or merger control
authorities of any other jurisdiction and which the parties reasonably deem
appropriate.
37
4.12 NOTIFICATION OF CERTAIN MATTERS. Between the date hereof and the
Closing Date, Company shall give prompt notice to Parent, and Parent shall give
prompt notice to Company, of (a) the occurrence or non-occurrence of any event
or circumstance the occurrence or non-occurrence of which would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate if made at such time and (b) any failure of Company or Parent, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder.
4.13 REGISTRATION OF CERTAIN SHARES. Promptly after the Effective Time,
Parent shall file registration statements with the SEC with respect to the
initial issuance of the shares of Parent Common Stock subject to Company Stock
Options. Parent shall use reasonable commercial efforts to have such
registration statements declared effective promptly after filing (to the extent
such registration statements are not automatically effective upon filing).
Parent shall use reasonable commercial efforts to maintain the effectiveness of
such registration statements for so long as such options or warrants remain
outstanding.
4.14 EMPLOYEE MATTERS.
(a) Following the Mergers, Parent shall cause the Second Surviving
Entity to provide that the employees of the Second Surviving Entity are covered
under Parent's then-current benefits plans, programs, policies and arrangements
applicable to similarly situated employees of Parent. Years of service with
Company and Company Subsidiaries prior to the Effective Time shall be treated as
service with the Second Surviving Entity or Parent for eligibility and vesting
purposes and for purposes of applicable benefit accruals, including but not
limited to vacation pay accruals, except to the extent such treatment will
result in a duplication of benefits.
(b) Following the Mergers, Parent shall take commercially reasonable
steps to cause to be waived all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the employees who were formerly employees of Company
and the Company Subsidiaries under any medical or dental benefit plans that such
employees are eligible to participate in after the Effective Time under
comparable plans maintained by Parent or the Second Surviving Entity, other than
limitations, exclusions or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the Effective
Time under any medical or dental plan maintained for such employees immediately
prior to the Effective Time by Company or a Company Subsidiary. With respect to
any waiting period that is not waived, service with Company or any Company
Subsidiary will be credited in accordance with Section 4.14(a). Provided that,
prior to the Closing Date, Company has provided Parent with the necessary
information, Parent shall credit under any medical or dental plan amounts
previously paid by employees who were formerly employees of Company or any
Company Subsidiary (or their dependents) during the plan year or calendar year
(as applicable) that includes the Effective Time toward any applicable
deductible, co-payment, out-of-pocket maximum or similar provision of such
Parent medical or dental plan.
(c) Except with the prior written consent of Parent, during the
period from the date hereof to the effective time of the Second Merger, Company
shall not and shall not permit any Company Subsidiary to (i) make any
discretionary contribution to the Company 401(k) plan (the "401(k) Plan") or to
the Company Executive Deferred Compensation Plan or (ii) make any
38
required contribution to the 401(k) Plan or to the Company Executive Deferred
Compensation Plan in Company Common Stock or in capital stock of any Company
Subsidiary or ERISA Affiliate. If requested by Parent, Company shall terminate
the 401(k) Plan and the Company Executive Deferred Compensation Plan at least
one business day prior to the Closing Date. As of the Effective Time, Parent
shall assume and honor in accordance with their terms all employment agreements
and change of control severance arrangements existing prior to the execution of
this Agreement which are between Company and any director, officer or employee
thereof and listed on Section 4.14(c) of the Company Disclosure Schedule, except
as otherwise expressly agreed between Parent and such person.
4.15 INDEMNIFICATION.
(a) Subject to the occurrence of the Effective Time, until the six
year anniversary of the date on which the Effective Time occurs (or, if any
claims are asserted or made within such 6 year period, until the later of the
disposition of such claims or expiration of any statute of limitation applicable
to such claim), Parent agrees that all rights to indemnification or exculpation
now existing in favor of each present and former director, officer, employee or
agent (including any director, officer, employee or agent who serves or served
in a fiduciary capacity of any Plan) of Company and the Company Subsidiaries
(the "Indemnified Parties") as provided in their respective charters or by-laws
in effect as of the date hereof shall survive and remain in full force and
effect with respect to actions or failures to act occurring prior to the
Effective Time, other than actions or failures to act that relate to a willful
breach of this Agreement.
(b) Parent understands and agrees that, prior to the Effective Time,
Company intends to obtain a six-year "tail" insurance policy that provides
coverage substantially similar to the coverage provided under Company's
directors and officers insurance policy in effect on the date of this Agreement
for the individuals who are directors and officers of Company on the date of
this Agreement for events occurring prior to the Effective Time; provided,
however, without Parent's prior written consent, Company shall not pay more than
$3,000,000 to purchase such policy; and provided, further, however, that prior
to purchasing any such policy, Company shall afford Parent the opportunity to
purchase a substitute policy on terms not materially less favorable to such
directors and officers.
(c) The provisions of this Section 4.15 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
4.16 SECTION 16 APPROVAL. Prior to the Effective Time, the Board of
Directors of Parent or an appropriate committee of non-employee directors
thereof, shall adopt a resolution consistent with the interpretive guidance of
the SEC with respect to the acquisition by any officer or director of Company
who will, at the Effective Time, become an officer or director of Parent for
purposes of Section 16 of the Exchange Act and the rules and regulations
thereunder of Parent Common Stock or options to acquire Parent Common Stock
pursuant to this Agreement and the First Merger.
4.17 PARTICIPATION IN CERTAIN ACTIONS AND PROCEEDINGS. Until this
Agreement is terminated in accordance with Section 8.1, Parent shall have the
right to participate in the defense of any action, suit or proceeding instituted
against Company (or any of its directors or
39
officers) before any court or governmental or regulatory body or threatened by
any governmental or regulatory body or any third party, including a Company
stockholder, to restrain, modify or prevent the consummation of the transactions
contemplated by this Agreement, or to seek damages or a discovery order in
connection with such transactions.
4.18 TAX ELECTIONS AND REPORTING. Parent, Sub, LLC and Company shall
report for federal income tax purposes the Mergers as a tax free reorganization
under Code Section 368(a) and shall not make any election or take any position
inconsistent with such reporting obligations.
SECTION 5 - CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF EACH PARTY TO CONSUMMATE THE MERGERS
The respective obligations of each party to consummate the Mergers shall be
subject to the satisfaction or waiver by consent of the other party, at or
before the Effective Time, of each of the following conditions:
5.1 STOCKHOLDER APPROVAL. Company shall have obtained the vote of
holders of Company Common Stock required to adopt this Agreement in accordance
with the provisions of the DGCL and the Certificate of Incorporation and By-laws
of Company.
5.2 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective; no stop order suspending the effectiveness of the
Registration Statement shall have been issued, and not withdrawn, by the SEC and
no proceedings for that purpose shall be underway at the SEC; and no similar
proceeding in respect of the Proxy Statement shall be underway at the SEC or, to
the best knowledge of Parent or Company, threatened by the SEC.
5.3 ABSENCE OF ORDER. No temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other governmental
entity of competent jurisdiction shall be in effect and have the effect of
making the Mergers illegal or otherwise prohibiting consummation of the Mergers.
Parent and Company each agrees to use reasonable commercial efforts to have any
such order or injunction lifted or stayed.
5.4 REGULATORY APPROVALS. All material approvals from governmental
entities shall have been obtained; provided, however, that the conditions of
this Section 5.4 shall not apply to any party whose failure to fulfill its
obligations under this Agreement shall have been the cause of, or shall have
resulted in, such failure to obtain such approval.
5.5 HSR ACT. The waiting period (and any extension thereof) applicable
to the Mergers under the HSR Act and applicable foreign competition or merger
control Laws shall have been terminated or shall have expired, and approvals
under all foreign competition or merger control laws that are reasonably
determined by Parent to be to be applicable to the Mergers shall have been
obtained.
5.6 NASDAQ. Parent Common Stock shall continue to be quoted on the
NASDAQ National Market.
40
SECTION 6 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
PARENT, LLC AND SUB TO CONSUMMATE THE MERGERS
The obligations of Parent, LLC and Sub to consummate the Mergers are
subject to the fulfillment of the following conditions, any one or more of which
may be waived by Parent:
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties made by Company in this Agreement shall have been accurate as of the
date of this Agreement and, other than representations and warranties made as of
a particular date, shall be accurate as of the Closing Date as if made on and as
of the Closing Date (without giving effect to any materiality or knowledge
qualifiers) except (other than representations and warranties set forth in
Section 2.3) to the extent failure to be accurate, in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. The
representations and warranties set forth in Section 2.3 shall be true and
correct in all respects (other than DE MINIMIS variations) as of the Closing
Date as if made on and as of the Closing Date. Company shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date. Company shall have delivered to Parent a certificate from its chief
executive officer and chief financial officer, dated the Closing Date, to the
foregoing effect.
6.2 CORPORATE CERTIFICATES. Company shall have delivered a copy of the
Certificate of Incorporation of Company, as in effect immediately prior to the
Closing Date, certified by the Delaware Secretary of State and a certificate, as
of the most recent practicable date, of the Delaware Secretary of State as to
Company's good standing.
6.3 SECRETARY'S CERTIFICATE. Company shall have delivered a certificate
of the Secretary of Company, dated as of the Closing Date, certifying as to (a)
the incumbency of officers of Company executing documents executed and delivered
in connection herewith, (b) a copy of the By-Laws of Company, as in effect from
the date this Agreement was approved by the Board of Directors of Company until
the Closing Date, (c) a copy of the resolutions of the Board of Directors of
Company authorizing and approving the applicable matters contemplated hereunder
and (iv) a copy of the resolutions of the stockholders of Company adopting this
Agreement.
6.4 AFFILIATE LETTERS. Parent shall have received the Affiliate Letters
referred to in Section 4.8.
6.5 TAX OPINION. Parent shall have received the opinion of its counsel,
dated as of the Closing Date, to the effect that the Mergers will constitute a
reorganization under Section 368(a) of the Code. In rendering such opinion,
counsel shall be entitled to rely on customary representation letters of Parent,
Company and others, in form and substance reasonably satisfactory to such
counsel.
6.6 CONSENTS. Company shall have obtained waivers or consents, which
shall remain in full force and effect, and provided notices, with respect to
each agreement required to be disclosed in Section 2.19 of the Company
Disclosure Schedule such that this Agreement and the consummation of the
transactions contemplated hereby do not result in any material modification or
termination of, or any material liability under, any such agreement.
41
6.7 FIRPTA CERTIFICATE. Company shall have provided to Parent a
certificate meeting the requirements of Treasury Regulation Section
1.445-2(c)(3) and shall have provided proper notice to the U.S. Internal Revenue
Service of the issuance of such certificate pursuant to Treasury Regulation
Section 1.897-2(b)(2).
6.8 PENDING LITIGATION. There shall not be pending any suit, action or
proceeding by any governmental entity against Parent, Company, Sub, LLC, any
Company Subsidiary, or any of their respective directors, officers or members
challenging this Agreement or the transactions contemplated hereby, seeking to
delay, restrain or prohibit the Mergers, seeking to prohibit or impose material
limitations on the ownership or operation of all or a portion of the operations
or assets of Company and the Company Subsidiaries (or Parent's direct equity
ownership of the Second Surviving Entity or indirect equity ownership, following
the Effective Time, of the Company Subsidiaries) or to compel Parent or a
subsidiary of Parent to dispose of or hold separate any material portion of
their business or assets or the business or assets of Company and the Company
Subsidiaries (or any equity interest in such entities).
SECTION 7 - CONDITIONS PRECEDENT TO THE OBLIGATION OF
COMPANY TO CONSUMMATE THE MERGERS
The obligation of Company to consummate the Mergers is subject to the
fulfillment of the following conditions, any one or more of which may be waived
by it:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties made by Parent in this Agreement shall have been accurate as of the
date of this Agreement and, other than representations and warranties made as of
a particular date, the representations and warranties of Parent shall be
accurate as of the Closing Date as if made on and as of the Closing Date
(without giving effect to any materiality or knowledge qualifiers) except to the
extent failure to be accurate, in the aggregate, would not reasonably be
expected to have a Parent Material Adverse Effect. Parent shall have performed
and complied in all material respects with all covenants and agreements required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date. Parent shall have delivered to Company a certificate from an
executive vice president, dated the Closing Date, to the foregoing effect.
7.2 TAX OPINION. Company shall have received the opinion of its counsel,
dated on or prior to the effective date of the Registration Statement, to the
effect that the Mergers will constitute reorganization(s) under Section 368(a)
of the Code; provided, however, if Company counsel was unwilling to deliver such
opinion, this condition shall be deemed satisfied if counsel to Parent delivered
and addressed such opinion to Parent and Company. In rendering such opinion,
counsel shall be entitled to rely on customary representation letters of Parent,
Company and Sub and others, in form and substance reasonably satisfactory to
such counsel.
7.3 MERGER DOCUMENTS. Sub shall have executed the First Certificate of
Merger, and LLC shall have executed the Second Certificate of Merger.
SECTION 8 - TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after the stockholders of Company adopt
this Agreement:
42
(a) by either Company or Parent, by written notice to the other, if
the Effective Time shall not have occurred on or before December 31, 2004;
provided, however, that the right to terminate this Agreement under this Section
8.1(a) shall not be available to any party whose willful failure to fulfill any
covenant or other agreement under this Agreement has resulted in the failure of
the Mergers to occur on or before such date; provided, further, however, that it
shall be a condition precedent to the termination of this Agreement by Company
pursuant to this Section 8.1(a) that Company shall have made any payment
required by Section 8.3;
(b) by Company (provided that Company is not then in material breach
of any representation, warranty, covenant or other agreement contained herein),
by written notice to Parent, if a circumstance exists or circumstances exist
such that it is reasonably certain that the conditions to Company's obligation
to close that are set forth in Section 7.1 will not be satisfied; provided,
however, Company shall not have a right to terminate this Agreement pursuant to
this Section 8.1(b), if (i) the circumstance is or the circumstances are
susceptible to change through action or inaction by Parent and (ii) within 20
days after written notice from Company, Parent effects a change in the
circumstance or circumstances such that it ceases to be reasonably certain that
the conditions to Company's obligation to close that are set forth in Section
7.1 will not be satisfied;
(c) by Parent (provided that Parent is not then in material breach
of any representation, warranty, covenant or other agreement contained herein),
by written notice to Company, if a circumstance exists or circumstances exist
such that it is reasonably certain that the conditions to Parent's obligation to
close that are set forth in Section 6.1 will not be satisfied; provided,
however, Parent shall not have a right to terminate this Agreement pursuant to
this Section 8.1(c), if (i) the circumstance is or the circumstances are
susceptible to change through action or inaction by Company and (ii) within 20
days after written notice from Parent, Company effects a change in the
circumstance or circumstances such that it ceases to be reasonably certain that
the conditions to Parent's obligation to close that are set forth in Section 6.1
will not be satisfied;
(d) by either Parent or Company, by written notice to the other, if
any governmental entity of competent jurisdiction shall have issued any
injunction or taken any other action permanently restraining, enjoining or
otherwise prohibiting the consummation of the Mergers and such injunction or
other action shall have become final and non-appealable;
(e) by either Parent or Company, by written notice to the other, if
the stockholders of Company shall not have adopted this Agreement within sixty
(60) days after the later of (i) the date Company mails the Proxy
Statement/Prospectus to the Company stockholders or (ii) the date of the most
recent supplemental proxy materials that are legally required to be distributed
to Company's stockholders; provided, however, that it shall be a condition
precedent to the termination of this Agreement by Company pursuant to this
Section 8.1(e) that Company shall have made the payment required by Section 8.3;
and provided further, that the right to terminate this Agreement under this
Section 8.1(e) shall not be available to any party whose willful failure to
fulfill any covenant or other agreement under this Agreement has been the cause
of or resulted in the failure to receive such stockholder vote on or before such
date;
(f) by Parent, by written notice to Company, if the Board of
Directors of Company (i) fails to include in the Proxy Statement/Prospectus its
recommendation that
43
Company's stockholders vote to adopt this Agreement, (ii) withdraws, modifies or
qualifies its approval of, or its recommendation that Company stockholders vote
in favor of, such action or takes any action or makes any statement inconsistent
with such approval or recommendation, (iii) fails to reaffirm such approval or
recommendation within five business days after Parent requests that such
approval or recommendation be reaffirmed, (iv) adopts resolutions approving or
otherwise authorizes or recommends an Alternative Transaction or (v) fails to
recommend against, or takes a neutral position with respect to, a tender or
exchange offer in any position taken pursuant to Rules 14d-9 and 14e-2(a) under
the Exchange Act;
(g) by Parent, in the event that Company or any of its directors
takes any of the actions described in clause (ii) of the second sentence of
Section 4.10 in response to a proposal for an Alternative Transaction more than
15 business days after it is obligated to notify Parent of its receipt of such
Alternative Transaction proposal;
(h) by Parent, if any person or group (as defined in Section
13(d)(3) of the Exchange Act), other than Parent or any of its affiliates, shall
have become the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of at least 20% of the outstanding shares of Company Common Stock; and
(i) at any time with the written consent of both Parent and Company.
8.2 EFFECT OF TERMINATION. If this Agreement is terminated as provided
in Section 8.1, this Agreement shall forthwith become void and have no effect,
without liability on the part of Parent, Sub, LLC and Company and their
respective directors, officers, stockholders, or members, except that (a) the
provisions of this Section 8, Section 9, Section 4.3 relating to expenses, and
Section 4.7 relating to publicity shall survive, and (b) no such termination
shall relieve any party from liability by reason of any willful breach by such
party of any of its representations, warranties, covenants or other agreements
contained in this Agreement.
8.3 TERMINATION FEE.
(a) FEE. If this Agreement is terminated by Company pursuant to
Section 8.1(a) or (e), or by Parent (i) pursuant to Section 8.1(e) or (f) or
(ii) pursuant to Section 8.1(c) due to a breach of a provision in Section 4.1(b)
or 4.10, then Company shall pay to Parent in cash $32.5 million (the "Fee");
provided, however, that the Fee shall not be owed if this Agreement is
terminated pursuant to 8.1(a) or 8.1(e) unless prior to the time of termination
a BONA FIDE Alternative Transaction shall have been announced and not withdrawn;
and, provided, further, however, that the Fee shall not be owed if the Agreement
is terminated pursuant to Section 8.1(a) if, at the time of such termination,
(i) the conditions set forth in Sections 5.2, 5.3, 5.4, 5.5, 5.6, 6.5, 6.6, 7.1,
or 7.3 have not been satisfied or waived or are not capable of prompt
satisfaction unless such failure is due to a breach of this Agreement by
Company, or (ii) if Parent is in material breach of this Agreement. Company
shall pay the Fee to Parent concurrently with Company terminating this Agreement
and within one business day of Parent terminating this Agreement.
(b) PAYMENTS. Any payments required under this Section 8.3 shall be
payable by Company by wire transfer of immediately available funds to an account
designated by Parent. If Company fails to promptly make any payment required
under this Section 8.3, and Parent
44
commences a suit to collect such payment, Company shall indemnify Parent for its
fees and expenses (including attorneys fees and expenses) incurred in connection
with such suit and shall pay interest on the amount of the payment at the prime
rate of Fleet National Bank (or its successors or assigns) in effect on the date
the payment was payable pursuant to this Section 8.3.
8.4 AMENDMENT. This Agreement may be amended at any time before or after
adoption of this Agreement by the stockholders of Company by an instrument
signed by each of the parties hereto; provided, however, that after adoption of
this Agreement by the stockholders of Company, without the further approval of
the stockholders of Company, no amendment may be made that (a) alters or changes
the amount or kind of consideration to be received as provided in Section 1.6,
(b) alters or changes any term of the Certificate of Incorporation of the First
Surviving Entity or (c) alters or changes any of the terms and conditions of
this Agreement if such alteration or change would adversely affect the
stockholders of Company.
8.5 WAIVER. At any time prior to the Effective Time, either party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other party hereto or (b) waive compliance with any of the
agreements of the other party or any conditions to its own obligations, in each
case only to the extent such obligations, agreements and conditions are intended
for its benefit; provided that any such extension or waiver shall be binding
upon a party only if such extension or waiver is set forth in a writing executed
by such party.
SECTION 9 - MISCELLANEOUS
9.1 NO SURVIVAL. None of the representations and warranties contained
herein shall survive the Effective Time and only those covenants and agreements
contained herein that by their terms are to be performed after the Effective
Time shall survive the Effective Time.
9.2 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when delivered in
person, by overnight courier, by facsimile transmission (with receipt confirmed
by telephone or by automatic transmission report) or two business days after
being sent by registered or certified mail (postage prepaid, return receipt
requested), as follows:
(a) if to Parent or Sub, to:
Genzyme Corporation
Genzyme Center
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Xx.
Telephone: 000-000-0000
Facsimile: 000-000-0000
45
with a copy to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to Company, to:
ILEX Oncology, Inc.
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Attn: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may by notice given in accordance with this Section 9.2 to the other
parties designate another address or person for receipt of notices hereunder.
9.3 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the Mergers and related transactions, and
supersedes all prior agreements, written or oral, between the parties with
respect thereto, other than the Confidentiality Agreement, which shall survive
execution of this Agreement and any termination of this Agreement other than any
"standstill" provision which shall expire concurrently with the execution and
delivery of this Agreement.
9.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without regard to
its conflict of law provisions, except to the extent that the laws of the State
of Delaware apply to the Mergers, the rights of Company and Sub stockholders
relative to the Mergers, and the rights of the member of LLC relative to the
Second Merger.
46
9.5 BINDING EFFECT; NO ASSIGNMENT; NO THIRD-PARTY BENEFICIARIES.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns. This
Agreement is not assignable without the prior written consent of the other
parties hereto.
(b) Other than Section 4.15, nothing in this Agreement, express or
implied, is intended to or shall confer upon any person other than Parent, Sub,
LLC and Company and their respective successors and permitted assigns any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
9.6 SECTION HEADINGS. The headings of Sections in this Agreement are
provided for convenience only and shall not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement.
9.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
9.8 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree shall remain in
full force and effect to the extent not held invalid or unenforceable. The
parties further agree to use reasonable commercial efforts to replace such
invalid or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such invalid or unenforceable provision.
9.9 SUBMISSION TO JURISDICTION; WAIVER. Each of Company, Parent, LLC and
Sub irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the courts of the Commonwealth of Massachusetts and each of
Company, Parent, LLC and Sub hereby irrevocably submits with regard to any
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Company, Parent, LLC and Sub hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), and (c) to the fullest extent permitted by applicable law, that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
9.10 ENFORCEMENT. The parties recognize and agree that if for any reason
any of the provisions of this Agreement are not performed in accordance with
their specific terms or are
47
otherwise breached, immediate and irreparable harm or injury would be caused for
which money damages would not be an adequate remedy. Accordingly, each party
agrees that in addition to other remedies the other party shall be entitled to
an injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action shall be brought in
equity to enforce the provisions of the Agreement, neither party shall allege,
and each party hereby waives the defense, that there is an adequate remedy at
law.
9.11 RULES OF CONSTRUCTION. All words used in this Agreement shall be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms. The parties hereto agree that they have been represented by
counsel during the negotiation and execution of this Agreement and, therefore,
waive the application of any law, regulation, holding or ruling of construction
providing that ambiguities in an agreement or other document shall be construed
against the party drafting such agreement or document.
9.12 WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY, LLC AND SUB HEREBY
IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENT OR ACTION RELATED HERETO OR
THERETO.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of
Merger under seal as of the date first stated above.
ILEX ONCOLOGY, INC.
By /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
GENZYME CORPORATION
By /s/ Xxxx X. Xxxxxxx, Xx.
---------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
GLBC CORP.
By: /s/ Xxxx X. Xxxxxxx, Xx.
---------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice President
GLBC LLC
By: /s/ Xxxx X. Xxxxxxx, Xx.
---------------------------------
(Authorized Person)
Name: Xxxx X. Xxxxxxx, Xx.
[Signature Page to Agreement and Plan of Merger]
EXHIBIT A
[FORM OF CERTIFICATE OF MERGER OF
GLBC CORP. WITH AND INTO ILEX ONCOLOGY, INC. ]
--------------------------------------------------------------------------------
Pursuant to Section 251 of the General Corporation Law of the State of Delaware
--------------------------------------------------------------------------------
The undersigned corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, does hereby certify that:
FIRST: The name and state of incorporation of each constituent
corporation of the merger is as follows:
Name State of Incorporation
---- ----------------------
ILEX Oncology, Inc. Delaware
GLBC Corp. Delaware
SECOND: A plan and agreement among the parties to the merger has been
approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with Section 251 of the General
Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is ILEX Oncology, Inc., a
Delaware corporation.
FOURTH: The certificate of incorporation of the surviving corporation
shall be the certificate of incorporation of ILEX Oncology, Inc., as amended and
restated prior to the date hereof.
FIFTH: The executed plan and agreement of merger is on file at an office
of the surviving corporation located at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx, 00000.
SIXTH: A copy of the plan and agreement of merger will be furnished by
the surviving corporation, on request and without cost, to any stockholder of
any constituent corporation.
SEVENTH: The effective time for the merger shall be 11:58 p.m. on {THE
CLOSING DATE}, 2004.
A-1
IN WITNESS WHEREOF, ILEX Oncology, Inc. has caused this certificate to be
signed by _____________________, its authorized officer, this ___ day of
_________, 2004.
ILEX ONCOLOGY, INC.
By:
---------------------------------
Name:
Title:
A-2
EXHIBIT B
[FORM OF CERTIFICATE OF MERGER OF
ILEX ONCOLOGY, INC. WITH AND INTO GLBC LLC]
--------------------------------------------------------------------------------
Pursuant to Section 264 of the General Corporation Law of the State of Delaware
and Section 18-209 of the Delaware Limited Liability Company Act
--------------------------------------------------------------------------------
The undersigned limited liability company organized and existing under and
by virtue of the Delaware Limited Liability Company Act, does hereby certify
that:
FIRST: The name and jurisdiction of formation or organization of each
entity which is to merge is as follows:
Name Jurisdiction of Formation/Organization
---- --------------------------------------
GLBC LLC Delaware
ILEX Oncology, Inc. Delaware
SECOND: A plan and agreement of merger has been approved, adopted,
certified, executed, and acknowledged, in accordance with Section 264 of the
General Corporation Law of the State of Delaware and otherwise to the extent
required under other applicable Delaware law, by each of the entities which is
to merge.
THIRD: The name of the surviving entity is GLBC LLC, a Delaware limited
liability company.
FOURTH: The effective time for the merger shall be 11:59 p.m. on {THE
CLOSING DATE}, 2004.
FIFTH: The executed plan and agreement of merger is on file at a place of
business of the surviving entity, located at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx, 00000.
SIXTH: A copy of the plan and agreement of merger will be furnished by
the surviving entity, on request and without cost, to any member of GLBC LLC or
any stockholder of ILEX Oncology, Inc.
B-1
IN WITNESS WHEREOF, GLBC LLC has caused this certificate to be signed by a
duly authorized agent, this ___ day of _________, 2004.
GLBC LLC
By:
---------------------------------
(Authorized Person)
Name:
B-2
EXHIBIT C
[FORM OF AFFILIATE LETTER]
___________, 2004
Genzyme Corporation
Genzyme Center
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of ILEX Oncology, Inc. ("Company"), a Delaware corporation, as
the term "affiliate" is used in Rule 145 of the rules and regulations of the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act"). Pursuant to the terms of the Agreement and
Plan of Merger (the "
Merger Agreement") dated as of February 26, 2004 among
Genzyme Corporation ("Parent"), a Massachusetts corporation, GLBC Corp.("Sub"),
Delaware corporation that is a wholly-owned subsidiary of Parent, GLBC LLC, a
Delaware limited liability company that is a wholly-owned subsidiary of Parent,
and Company, Company will be merged with Sub (the "First Merger").
In connection with the First Merger, I may become entitled to receive
shares of Genzyme common stock, $0.01 par value per share (the "Parent Shares"),
in exchange for the shares owned by me of common stock, $0.01 par value per
share, of Company (the "Company Shares").
I represent, warrant and covenant to Parent that in the event I receive any
Parent Shares as a result of the First Merger:
(a) I shall not make any sale, transfer or other disposition of the
Parent Shares in violation of the Securities Act or the rules and regulations
thereunder.
(b) I have carefully read this letter and the
Merger Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of the Parent Shares, to
the extent I felt necessary, with my counsel or counsel for Company.
(c) I have been advised that the issuance of the Parent Shares to me
pursuant to the First Merger has been or will be registered with the SEC under
the Securities Act on a Registration Statement on Form S-4; however, because I
may be deemed to be an affiliate of Company and the distribution of the Parent
Shares by me or on my behalf has not been registered under the Securities Act,
dispositions of the Parent Shares by me or on my behalf may be restricted under
the Securities Act and the rules and regulations thereunder. I will not sell,
transfer, hedge, encumber or otherwise dispose of the Parent Shares issued to me
in the First Merger unless the disposition (x) is made in conformity with the
volume and other limitations of
C-1
Rule 145 under the Securities Act (or a successor provision), (y) is made
pursuant to an effective registration statement under the Securities Act or (z)
is, in the opinion of counsel reasonably acceptable to Parent or as described in
a "no-action" or interpretive letter from the staff of the SEC, exempt from
registration under the Securities Act.
(d) I understand that Parent is under no obligation to register under
the Securities Act (or otherwise) the disposition of the Parent Shares by me or
on my behalf or to take any other action necessary in order to make compliance
with an exemption from such registration available.
(e) I also understand that there will be placed on the certificates for
the Parent Shares issued to me, or any substitutions therefor, a legend stating
in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND GENZYME.
(f) I also understand that unless a sale or transfer is made in
conformity with the provisions of Rule 145 under the Securities Act (and
satisfactory evidence of such conformity is provided to Parent), or pursuant to
an effective registration statement, Parent reserves the right to put the
following legend on the certificates issued to my transferee:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND WERE ACQUIRED FROM
A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES.
THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR
FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE
MEANING OF THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
OF 1933, AS AMENDED.
I understand and agree that the legends set forth in paragraphs (e) and (f)
above shall be removed by delivery of substitute certificates without such
legends if I shall have delivered to Parent a copy of a "no action" or
interpretive letter from the staff of the SEC, or an opinion of counsel
reasonably satisfactory to Parent in form and substance satisfactory to Parent,
to the effect that disposition of the shares by the holder thereof is not
restricted under the Securities Act.
C-2
Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of Company as described in the first paragraph of this
letter, or as a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter.
Very truly yours,
------------------------------------
Name (print):
Address:
Accepted:
GENZYME CORPORATION
By:
-------------------------------
Name (print):
Title:
Dated:
-------------------------------
[Signature Page to Affiliate Letter]
C-3
