AGREEMENT AND PLAN OF MERGER by and among MERCK & CO., INC., SPINNAKER ACQUISITION CORP. a wholly owned subsidiary of MERCK & CO., INC. and SIRNA THERAPEUTICS, INC. Dated as of October 30, 2006
EXHIBIT
2.1
by
and among
MERCK
& CO., INC.,
SPINNAKER
ACQUISITION CORP.
a
wholly owned subsidiary of MERCK & CO., INC.
and
SIRNA
THERAPEUTICS, INC.
Dated
as of October 30, 2006
TABLE
OF
CONTENTS
Page
|
ARTICLE
I
|
The
Merger; Closing; Effective Time
|
1
|
|
1.1
|
The
Merger
|
1
|
|
1.2
|
Closing
|
2
|
|
1.3
|
Effective
Time
|
2
|
|
ARTICLE
II
|
Certificate
of Incorporation and Bylaws of the Surviving Corporation
|
2
|
|
2.1
|
The
Certificate of Incorporation
|
2
|
|
2.2
|
The
Bylaws
|
2
|
|
ARTICLE
III
|
Officers
and Directors of the Surviving Corporation
|
2
|
|
3.1
|
Directors
|
2
|
|
3.2
|
Officers
|
2
|
|
ARTICLE
IV
|
Effect
of the Merger on Capital Stock; Exchange of Certificates
|
3
|
|
4.1
|
Effect
on Capital Stock
|
3
|
|
4.2
|
Exchange
of Certificates for Shares.
|
4
|
|
4.3
|
Dissenters’
Rights
|
5
|
|
4.4
|
Adjustments
to Prevent Dilution
|
5
|
|
4.5
|
Treatment
of Company Options and Warrants.
|
6
|
|
4.6
|
Withholding
Rights
|
6
|
|
ARTICLE
V
|
Representations
and Warranties of the Company
|
6
|
|
5.1
|
Organization,
Good Standing and Qualification; Subsidiaries.
|
7
|
|
5.2
|
Capitalization
of the Company and its Subsidiaries.
|
7
|
|
5.3
|
Corporate
Authority; Approval and Fairness.
|
9
|
|
5.4
|
Consents
and Approvals; No Violations
|
9
|
|
5.5
|
Compliance
with Laws; Licenses.
|
10
|
|
5.6
|
No
Default
|
13
|
|
5.7
|
Company
Reports; Financial Statements.
|
13
|
|
5.8
|
No
Undisclosed Liabilities
|
14
|
|
5.9
|
Absence
of Certain Changes or Events
|
14
|
|
5.10
|
Litigation
|
15
|
|
5.11
|
Significant
Contracts.
|
15
|
|
5.12
|
Disclosure
Documents
|
16
|
|
5.13
|
Employee
Benefit Plans.
|
16
|
|
5.14
|
Intellectual
Property.
|
19
|
|
5.15
|
Taxes
|
21
|
|
5.16
|
No
Payments Not Deductible Pursuant to Section 280G
|
22
|
|
5.17
|
Real
Property; Leasehold
|
22
|
|
5.18
|
Environmental
Matters
|
22
|
|
5.19
|
Insurance
|
23
|
|
5.20
|
Takeover
Statutes; Charter Provisions
|
23
|
|
5.21
|
Brokers
|
24
|
|
5.22
|
Rights
Agreement
|
00
|
-x-
XXXXX
XX XXXXXXXX
(xxxx.)
Page
|
|
||
|
5.23
|
Third
Party Supply
|
24
|
|
ARTICLE
VI
|
Representations
and Warranties of Parent and Merger Sub
|
24
|
|
6.1
|
Organization,
Good Standing and Qualification
|
24
|
|
6.2
|
Authority
Relative to this Agreement
|
25
|
|
6.3
|
Consents
and Approvals; No Violations
|
25
|
|
6.4
|
Merger
Sub
|
25
|
|
6.5
|
Disclosure
Documents
|
25
|
|
6.6
|
Availability
of Funds
|
26
|
|
6.7
|
Brokers
|
26
|
|
6.8
|
Access
|
26
|
|
ARTICLE
VII
|
Covenants
of the Parties
|
26
|
|
7.1
|
Operations
of the Company’s Business.
|
26
|
|
7.2
|
Acquisition
Proposals.
|
29
|
|
7.3
|
Stockholder
Meeting; Proxy Material.
|
31
|
|
7.4
|
Commercially
Reasonable Efforts; Cooperation.
|
32
|
|
7.5
|
Access
|
34
|
|
7.6
|
Consents
|
34
|
|
7.7
|
Public
Announcements
|
34
|
|
7.8
|
Employee
Benefits.
|
34
|
|
7.9
|
Indemnification;
Directors’ and Officers’ Insurance.
|
36
|
|
7.10
|
Takeover
Statutes
|
37
|
|
7.11
|
Rights
Plan
|
37
|
|
7.12
|
Confidentiality
|
37
|
|
7.13
|
Resignations
|
37
|
|
7.14
|
Stockholder
Litigation
|
37
|
|
ARTICLE
VIII
|
Conditions
to Merger
|
37
|
|
8.1
|
Conditions
to the Obligations of the Company, Parent and Merger Sub to Effect
the
Merger
|
37
|
|
8.2
|
Conditions
to Obligations of Parent and Merger Sub
|
38
|
|
8.3
|
Conditions
to Obligation of the Company
|
39
|
|
ARTICLE
IX
|
Termination
|
39
|
|
9.1
|
Termination
by Mutual Consent
|
39
|
|
9.2
|
Termination
by Either Parent or the Company
|
39
|
|
9.3
|
Termination
by the Company
|
39
|
|
9.4
|
Termination
by Parent
|
40
|
|
9.5
|
Effect
of Termination and Abandonment; Termination Fee.
|
40
|
|
ARTICLE
X
|
Miscellaneous
and General
|
41
|
|
10.1
|
Non-Survival
of Representations and Warranties and Agreements
|
41
|
|
10.2
|
Modification
or Amendment
|
41
|
|
10.3
|
Waiver
of Conditions
|
41
|
-ii-
TABLE
OF CONTENTS
(cont.)
Page
|
|
||
|
10.4
|
Counterparts;
Signatures
|
41
|
|
10.5
|
GOVERNING
LAW AND VENUE; WAIVER OF JURY TRIAL.
|
42
|
|
10.6
|
Notices
|
42
|
|
10.7
|
Entire
Agreement
|
44
|
|
10.8
|
No
Third Party Beneficiaries
|
44
|
|
10.9
|
Severability
|
44
|
|
10.10
|
Interpretation;
Absence of Presumption.
|
44
|
|
10.11
|
Expenses
|
44
|
|
10.12
|
Assignment
|
45
|
|
10.13
|
Attorneys’
Fees
|
45
|
|
10.14
|
Certain
Definitions
|
45
|
-iii-
AGREEMENT
AND PLAN OF MERGER
(this
“Agreement”),
dated
as of October 30, 2006, by and among MERCK & CO., INC., a New Jersey
corporation (“Parent”),
SPINNAKER
ACQUISITION CORP.,
a
Delaware corporation and a wholly-owned subsidiary of Parent (“Merger
Sub”),
and
SIRNA
THERAPEUTICS, INC.,
a
Delaware corporation (the “Company”).
RECITALS
WHEREAS,
the respective Boards of Directors of Parent, Merger Sub and the Company have
approved this Agreement, and deem it advisable and in the best interests of
their respective stockholders to consummate the merger of Merger Sub with and
into the Company on the terms and conditions set forth in this Agreement (the
“Merger”)
whereby each issued and outstanding share of common stock, $0.01 par value,
of
the Company (the “Common
Stock”),
other
than the Common Stock owned by Parent, Merger Sub or the Company (or any of
their respective direct or indirect wholly owned subsidiaries) and the
Dissenting Shares, shall be converted into the right to receive the Merger
Consideration as set forth in this Agreement;
WHEREAS,
Parent, as the sole stockholder in Merger Sub, will approve the Merger and
the
transactions contemplated hereby by written consent immediately following the
execution hereof;
WHEREAS,
Parent, Merger Sub and the Company, desire to make those representations,
warranties, covenants and agreements specified herein in connection with this
Agreement; and
WHEREAS,
concurrently with the execution of this Agreement, and as a condition and
inducement to Parent’s willingness to enter into this Agreement, certain
stockholders of the Company have entered into a Voting Agreement in the form
attached hereto as Exhibit A.
NOW,
THEREFORE, in consideration of and reliance upon the premises and the
representations, warranties, covenants and agreements contained herein, and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, and intending to be legally bound hereby, Parent, Merger
Sub and the Company agree as follows:
ARTICLE
I
The
Merger; Closing; Effective Time
1.1. The
Merger.
Upon
the terms and subject to the conditions set forth in this Agreement, at the
Effective Time, Merger Sub shall be merged with and into the Company and the
separate corporate existence of Merger Sub shall thereupon cease. The Company
shall be the surviving corporation in the Merger (sometimes hereinafter referred
to as the “Surviving
Corporation”),
and
the separate corporate existence of the Company with all its rights,
privileges,
immunities,
powers and franchises shall continue unaffected by the Merger, except as set
forth in Article II of this Agreement. The Merger shall have the effects
specified in the Delaware General Corporation Law, as amended (the “DGCL”).
1.2. Closing.
Unless
otherwise mutually agreed in writing between Parent and the Company, the closing
for the Merger (the “Closing”)
shall
take place at the offices of O’Melveny & Xxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000, at 5:00 P.M. local time on the second
(2nd)
business day (the “Closing
Date”)
following the day on which the last to be satisfied or waived of the conditions
set forth in Article VIII (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of those conditions) shall be
satisfied or waived in accordance with this Agreement.
1.3. Effective
Time.
As soon
as practicable following the Closing, Parent and the Company will cause a
Certificate of Merger (the “Certificate
of Merger”)
to be
executed, acknowledged and filed with the Secretary of State of the State of
Delaware as provided in Section 251 of the DGCL. The Merger shall become
effective at the time when the Delaware Certificate of Merger has been duly
filed with the Secretary of State of the State of Delaware or at such later
time
as may be agreed by Parent and the Company in writing and specified in the
Delaware Certificate of Merger (the “Effective
Time”).
ARTICLE
II
Certificate
of Incorporation and Bylaws
of
the Surviving Corporation
2.1. The
Certificate of Incorporation.
The
certificate of incorporation of the Company shall be amended in its entirety
to
read as set forth as Exhibit B hereto and as so amended shall be the certificate
of incorporation of the Surviving Corporation (the “Charter”),
until
thereafter amended as provided therein or by applicable Law.
2.2. The
Bylaws.
The
Bylaws of Merger Sub in effect at the Effective Time shall be the Bylaws of
the
Surviving Corporation (the “Bylaws”),
until
thereafter amended as provided therein or in accordance with the Charter and
applicable Law.
ARTICLE
III
Officers
and Directors
of
the Surviving Corporation
3.1. Directors.
Unless
otherwise determined by Parent prior to the Effective Time, the directors of
Merger Sub at the Effective Time shall, from and after the Effective Time,
be
the directors of the Surviving Corporation until their successors have been
duly
elected or appointed and qualified or until their earlier death, resignation
or
removal in accordance with the Charter and the Bylaws.
3.2. Officers.
Unless
otherwise determined by Parent prior to the Effective Time, the officers of
Merger Sub at the Effective Time shall, from and after the Effective
Time,
-2-
be
the
officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation
or
removal in accordance with the Charter and the Bylaws.
ARTICLE
IV
Effect
of the Merger on Capital Stock;
Exchange
of Certificates
4.1. Effect
on Capital Stock.
At the
Effective Time, on the terms and subject to the conditions herein set forth,
as
a result of the Merger and without any action on the part of the holder of
any
capital stock of the Company:
(a) Merger
Consideration.
Each
share of the Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares of Common Stock (i) owned by Parent or
any direct or indirect wholly-owned Subsidiary of Parent (collectively, the
“Parent
Companies”),
(ii) owned by the Company or any direct or indirect Subsidiary of the
Company, or (iii) shares of Common Stock (the “Dissenting
Shares”)
that
are owned by stockholders (the “Dissenting
Stockholders”)
properly exercising appraisal rights pursuant to Section 262 of the DGCL
(each, an “Excluded
Common Share”
and
collectively, “Excluded
Common Shares”))
shall
be converted automatically into the right to receive $13.00 in cash, without
interest (the
“Merger
Consideration”).
At
the Effective Time, all shares of Common Stock shall no longer be outstanding
and shares of Common Stock shall be cancelled and retired and shall cease to
exist, and each certificate (a “Certificate”)
formerly representing any such shares of Common Stock (other than Excluded
Common Shares) shall thereafter represent only the right to the Merger
Consideration and any Dissenting Shares shall thereafter represent only the
right to receive the applicable payments set forth in
Section 4.3.
(b) Cancellation
of Shares.
Each
share of Common Stock issued and outstanding immediately prior to the Effective
Time and owned by any of the Parent Companies, the Company or any direct or
indirect Subsidiary of the Company (in each case, other than such shares of
Common Stock that are held on behalf of third parties) shall, by virtue of
the
Merger and without any action on the part of the holder thereof, cease to be
outstanding, shall be cancelled and retired without payment of any consideration
therefor and shall cease to exist.
(c) Merger
Sub.
At the
Effective Time, each share of common stock, par value $0.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(d) Employee
Stock Purchase Plan.
Each
right to purchase Common Stock (a “Purchase
Right”)
outstanding for the Offering Period under the Company’s Employee Stock Purchase
Plan ( the “ESPP”)
that
terminates at the Effective Time shall be cancelled and each participant in
the
ESPP for that Offering Period shall be entitled to receive, within ten
(10)
-3-
business
days of the Effective Time, in lieu of any other consideration otherwise payable
to such participant under the ESPP with respect to such Purchase Right, an
amount in cash equal to (a) the Merger Consideration multiplied by (b) the
number of whole and fractional shares of Common Stock that would have been
issuable upon exercise of such Purchase Right had it been exercised at the
Effective Time and the participant purchased the maximum number of shares
subject thereto using the full amount of his or her accumulated payroll
deductions to the ESPP for that Offering Period, all such actions to have the
same effect as described in Section 12(b)(iii) of the ESPP. All amounts payable
pursuant to this Section 4.1(d) shall be subject to and reduced by the amount
of
any withholding that is required under applicable Tax Law.
4.2. Exchange
of Certificates for Shares.
(a) Closing
of the Company’s Transfer Books.
At the
Effective Time, (a) all shares of Common Stock outstanding immediately prior
to
the Effective Time shall automatically be canceled and retired and shall cease
to exist, and all holders of certificates representing shares of Common Stock
that were outstanding immediately prior to the Effective Time shall cease to
have any rights as stockholders of the Company; and (b) the stock transfer
books
of the Company shall be closed with respect to all shares of Common Stock
outstanding immediately prior to the Effective Time. At or after the Effective
Time, there shall be no transfers on the stock transfer books of the Company
of
the shares of Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the
Surviving Corporation or Parent for transfer, they shall be cancelled and
exchanged for a check in the proper amount pursuant to this
Article IV.
(b) Paying
Agent.
From
time to time following the Effective Time, Parent shall deposit, or shall cause
to be deposited, with a paying agent appointed by Parent and approved in advance
by the Company (such approval not to be unreasonably withheld, conditioned
or
delayed) (the “Paying
Agent”),
for
the benefit of the holders of shares of Common Stock, cash for the prompt
payment of the Merger Consideration in exchange for shares of Common Stock
outstanding immediately prior to the Effective Time (other than Excluded Common
Shares), deliverable upon due surrender of the Certificates, pursuant to the
provisions of this Article IV (such cash being hereinafter referred to as the
“Exchange
Fund”).
(c) Payment
Procedures.
Promptly after the Effective Time, the Surviving Corporation shall cause the
Paying Agent to mail to each holder of record of shares of Common Stock
(i) a letter of transmittal specifying that delivery shall be effected, and
risk of loss and title to Certificates shall pass, only upon delivery of
Certificates to the Paying Agent and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration.
Upon
the surrender of a Certificate to the Paying Agent in accordance with the terms
of such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor a check in the amount (after
giving effect to any required Tax withholdings) of (x) the number of shares
of
Common Stock represented by such Certificate multiplied by (y) the Merger
Consideration and the Certificate so surrendered shall forthwith be cancelled.
No interest will be paid or accrued on any amount payable upon due surrender
of
the Certificates. In the event of a transfer of ownership of shares of Common
Stock that is not
-4-
registered
in the transfer records of the Company, a check for any cash to be paid upon
due
surrender of the Certificate may be paid to such a transferee if the Certificate
formerly representing such shares of Common Stock is presented to the Paying
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer Taxes have been
paid
or are not applicable.
(d) Termination
of Exchange Fund.
Any
portion of the Exchange Fund (including the proceeds of any investments thereof)
that remains unclaimed by the stockholders of the Company for 180 days after
the
Effective Time shall be delivered to the Surviving Corporation. Any holders
of
shares of Common Stock (other than Excluded Common Shares) who have not
theretofore complied with this Article IV shall thereafter look only to the
Surviving Corporation for payment of (after giving effect to any required Tax
withholdings) the Merger Consideration, upon due surrender of their
Certificates, without any interest thereon. Notwithstanding the foregoing,
none
of Parent, Merger Sub, the Company, the Paying Agent or any other Person shall
be liable to any former holder of shares of Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar Laws. If any Certificate shall not have been surrendered
prior to the date on which the applicable Merger Consideration would otherwise
escheat to or become the property of any Governmental Entity, any such Merger
Consideration shall, to the extent permitted by applicable Law, become the
property of Parent, free and clear of all claims or interest of any Person
previously entitled thereto.
(e) Lost,
Stolen or Destroyed Certificates.
In the
event 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 the posting by such Person of a bond in customary amount
and upon such terms as may be required by Parent as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent
will issue a check in the amount (after giving effect to any required Tax
withholdings) of the number of shares of Common Stock represented by such lost,
stolen or destroyed Certificate multiplied by the Merger Consideration upon
due
surrender of such lost, stolen or destroyed Certificate being surrendered.
Any
affidavit of loss presented pursuant to this Article IV, to be deemed effective,
must be in form and substance reasonably satisfactory to the Surviving
Corporation.
4.3. Dissenters’
Rights.
Any
Person who otherwise would be deemed a Dissenting Stockholder shall not be
entitled to receive the Merger Consideration with respect to the shares of
Common Stock owned by such Person unless and until such Person shall have failed
to perfect or shall have effectively withdrawn or lost such holder’s right to
dissent from the Merger under the DGCL. Each Dissenting Stockholder shall be
entitled to receive only the payment provided by Section 262 of the DGCL
with respect to shares of Common Stock owned by such Dissenting Stockholder.
The
Company shall give Parent (i) prompt notice of any written demands for
appraisal, attempted withdrawals of such demands and any other instruments
served pursuant to applicable Law received by the Company relating to
stockholders’ rights of appraisal and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demand for appraisal under the
DGCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
Dissenting Shares, offer to settle or settle any such demands or approve any
withdrawal of any such demands.
-5-
4.4. Adjustments
to Prevent Dilution.
In the
event that the Company changes the number of shares of Common Stock, or
securities convertible or exchangeable into or exercisable for shares of Common
Stock, issued and outstanding prior to the Effective Time as a result of a
reclassification, stock split (including a reverse stock split), stock dividend
or distribution, recapitalization, merger, subdivision, issuer tender or
exchange offer, or other similar transaction, the Merger Consideration shall
be
equitably adjusted to reflect such change.
4.5. Treatment
of Company Options and Warrants.
(a) Effective
as of the Effective Time each outstanding option to purchase shares of Company
Common Stock (each a “Company
Stock Option”)
that
is outstanding and unexercised as of immediately prior to the Effective Time
shall be cancelled as of the Effective Time, whether then vested or unvested,
in
exchange for the right to receive a cash payment, without interest, equal to
(i)
the Merger Consideration, less the per-share exercise price of such option,
multiplied by (ii) the number of shares of Company Common Stock subject to
such
Company Stock Option. Such cash payment shall be made to the holder of such
option as soon as practicable after the Effective Time. For purposes of clarity,
no cash payment will be made with respect to any Company Stock Option so
cancelled with a per-share exercise price that equals or exceeds the Merger
Consideration.
(b) The
Company agrees to use its commercially reasonable efforts to cause all holders
of the Company’s outstanding warrants (the “Warrants”)
to
fully exercise such Warrants prior to the Effective Time. Parent and Company
agree to take all actions necessary to comply with the provisions of each of
the
Company’s Warrants in accordance with their terms as in effect immediately
before the Effective Time, including, without limitation, Parent taking any
necessary actions or executing any necessary instruments to assume the Company’s
obligations thereunder, issuing to the holder a new warrant consistent with
the
provisions of the Warrant as in effect immediately before the Effective Time
or
making a cash payment consistent with the provisions of the Warrant as in effect
immediately before the Effective Time, as applicable.
4.6. Withholding
Rights.
Parent,
the Surviving Corporation or the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
to
any holder of shares of Common Stock, Company Stock Options, Purchase Rights
or
Warrants, as applicable, such amounts as Parent, the Surviving Corporation
or
the Paying Agent, as applicable, is required to deduct and withhold with respect
to the making of such payment under the Internal Revenue Code of 1986, as
amended (the “Code”),
or
any provision of state, local or foreign Tax Law. To the extent that amounts
are
so withheld and paid over to the appropriate taxing authority by Parent, the
Surviving Corporation or the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder
of
the shares of Common Stock, Company Stock Options, Purchase Rights or Warrants,
as applicable, in respect of which such deduction and withholding was made
by
such party.
-6-
ARTICLE
V
Representations
and Warranties of the Company
Except
as
set forth in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2005 and the Company’s Quarterly Reports on Form 10-Q for the
periods ended March 31, 2006 and June 30, 2006, excluding information disclosed
in the “Risk Factors” sections and “Forward-Looking Information” sections of
such reports filed prior to the date hereof (it being understood that any matter
disclosed in the reports shall be deemed to be disclosed for all purposes of
this Agreement and the Company Disclosure Schedule, as long as the relevance
of
such disclosure is readily apparent) and the applicable section of the
disclosure schedule delivered by the Company to Parent on the date hereof (the
“Company
Disclosure Schedule”)
(it
being understood that any matter disclosed pursuant to any section or subsection
of the Company Disclosure Schedule shall be deemed to be disclosed for any
other
section or subsection so long as the applicability to such other section or
subsection is readily apparent from the face of such disclosure), the Company
hereby represents and warrants to Parent and Merger Sub as follows:
5.1. Organization,
Good Standing and Qualification; Subsidiaries.
(a) Each
of
the Company and its Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing (with respect to jurisdictions
that recognize the concept of good standing) under the Laws of the jurisdiction
of its incorporation or organization and has all requisite corporate or other
power and authority to own, lease and operate its properties and assets and
to
carry on its businesses as now being conducted and is qualified to do business
and is in good standing (with respect to jurisdictions that recognize the
concept of good standing) as a foreign corporation in each jurisdiction where
the ownership, leasing or operation of its properties or assets or conduct
of
its business requires such qualification, except where the failure to be so
qualified or in good standing (with respect to jurisdictions that recognize
the
concept of good standing) or to have such power or authority, does not have,
and
would not reasonably be expected to have, either individually or in the
aggregate, a Company Material Adverse Effect. Neither the Company nor any of
its
Subsidiaries is in violation of its organizational or governing documents,
except for such violations that do not have, and would not reasonably be
expected to have, either individually or in the aggregate, a Company Material
Adverse Effect. The Company has heretofore delivered or made available to Parent
accurate and complete copies of the Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws and other organizational
documents, as currently in effect, of the Company and each of its
Subsidiaries.
(b) Section
5.1(b)
of the
Company Disclosure Schedule contains a complete and accurate list of the name
and jurisdiction of organization of each Subsidiary of the Company.
5.2. Capitalization
of the Company and its Subsidiaries.
(a) The
authorized capital stock of the Company consists of 125,000,000 shares of
capital stock, including 120,000,000 shares of Common Stock, of which 72,960,367
shares of Common Stock were issued and outstanding as of the close of business
on October 27,
-7-
2006,
5,000,000 shares of Preferred Stock, par value $0.01 per share (“Preferred
Stock”),
none
of which Preferred Stock is outstanding (including 200,000 shares of Series
AA
Junior Preferred Stock, par value $0.01 per share, reserved for issuance in
connection with the exercise of preferred stock purchase rights (the
“Company
Rights”)
issued
pursuant to that certain Rights
Agreement, dated as of November 22, 2000, between the Company and American
Stock Transfer & Trust Company, as Rights Agent, as amended by
Amendment No. 1 thereto, dated February 11, 2003
(the
“Rights
Agreement”)).
All
of the outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable. The Company has no shares of Common
Stock or Preferred Stock reserved for or otherwise subject to issuance, except
that as of the close of business on October 27, 2006, there were
6,656,963 shares
of
the Common Stock subject to issuance pursuant to options outstanding under
the
plans of the Company identified in Section
5.2
of the
Company Disclosure Schedule or the Company Stock Plans and 10,382,372 shares
of
the Common Stock subject to issuance pursuant to the Warrants. The name of
the
holder of each Company Stock Option, the exercise price of such Company Stock
Option and the aggregate number of shares of Common Stock subject to such
Company Stock Option are set forth on Section 5.2(a) of the Company Disclosure
Schedule. 449,344 shares of the Common Stock are reserved for issuance pursuant
to the ESPP, of which 25,000 Shares will be issued at the conclusion of the
Offering Period ending October 31, 2006. Each of the outstanding shares of
capital stock or other ownership interests of each of the Company’s Subsidiaries
is duly authorized, validly issued, fully paid and nonassessable and owned
by
the Company or a direct or indirect wholly owned Subsidiary of the Company,
in
each case free and clear of any Lien. There are no registration rights or
preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind which obligate the
Company or any of its Subsidiaries to register, issue or sell any shares of
capital stock or other securities of the Company or any of its Subsidiaries
or
any securities or obligations convertible or exchangeable into or exercisable
for, or giving any Person a right to subscribe for or acquire from the Company
or any of its Subsidiaries, any securities of the Company or any of its
Subsidiaries, and no securities or obligations evidencing such rights are issued
or outstanding. The Company does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
which
are convertible into or exercisable for securities having the right to vote)
with the stockholders of the Company on any matter.
(b) As
of the
date of this Agreement, there are outstanding and unexercised Warrants to
purchase 10,382,372 shares of Common Stock. Section
5.2(b)
of the
Company Disclosure Schedule identifies for each Warrant, (i) the name of the
holder of the Warrant as of the date of this Agreement; (ii) the date on which
such Warrant was granted; (iii) the exercise price per share of the Warrant;
(iv) the number of shares covered by the Warrant; (v) the number of shares
of
Common Stock as to which such Warrant had vested at such date; (vi) the
applicable vesting schedule for such Warrant and whether the exercisability
or
vesting of the Warrant will be accelerated in any way by the Merger or the
transactions contemplated hereby; (vii) whether such Warrant was issued in
connection with the performance of services and (viii) the date on which the
Warrant expires. All of the shares of Common Stock subject to the issuance
pursuant to the Warrants, upon issuance prior to or at the Effective Time on
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly
-8-
issued,
fully paid, nonassessable and free of preemptive rights. The Company has made
available to Parent complete and correct copies of all Warrants.
(c) There
are
no voting trusts or other agreements or understandings to which the Company
or
any of its Subsidiaries is a party with respect to the voting of any of the
capital stock of the Company or any of the Subsidiaries. Other than as set
forth
on Section
5.2
of the
Company Disclosure Schedule, none of the Company or any of its Subsidiaries
is
obligated under any registration rights or similar agreements to register any
shares of capital stock of the Company or any of its Subsidiaries on behalf
of
any Person.
(d) Since
October 12, 2004, no milestone event as described in the Sale Agreement among
the Company, Skinetics Biosciences, Inc. and the sellers described therein
has
occurred and no fact, event or circumstance has occurred that would reasonably
be expected to cause such a milestone event to occur.
(e) Prior
to
the date hereof, the Company has taken all actions with respect to the ESPP
as
are necessary to provide that the ESPP shall terminate prior to the Effective
Time, that no Person will have any right to purchase Common Stock under the
ESPP
after the Effective Time and that no more than 20,000 shares of Common Stock
may
be issued in the aggregate with respect to any Offering Period (as defined
in
the ESPP) that begins after the date hereof (but prior to the Effective Time).
The Company has provided to Parent written evidence of each of the foregoing.
Any Offering Period (as defined in the ESPP) in effect immediately prior to
the
Effective Time will terminate at the Effective Time.
5.3. Corporate
Authority; Approval and Fairness.
(a) The
Company has all requisite corporate power and authority and has taken all
corporate action necessary in order to execute, deliver and perform its
obligations under this Agreement, subject only to adoption of this Agreement
by
its stockholders by the Company Requisite Vote, and to consummate the Merger.
The affirmative vote of a majority of the outstanding shares of Common Stock
(such affirmative vote, the “Company
Requisite Vote”),
is
the only vote of the holders of any class or series of capital stock or
securities of the Company necessary to adopt, approve or authorize this
Agreement, the Merger and the other transactions contemplated hereby. This
Agreement is a valid and binding agreement of the Company enforceable against
the Company in accordance with its terms except
for (i) the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium
and
similar laws relating to or affecting the rights of creditors generally and
(ii) the
effect of equitable principles of general application.
(b) The
Board
of Directors of the Company (the “Company
Board”)
at a
duly held meeting has unanimously (i) approved the execution, delivery and
performance of this Agreement and the consummation by the Company of the
transactions contemplated hereby, including the Merger; (ii) received the
oral opinion of its financial advisors, Xxxxxxx, Xxxxx & Co., to be
subsequently confirmed in writing, to the effect that as of the date of this
Agreement and based upon and subject to the assumptions and limitations set
forth therein, the Merger Consideration to be received by the holders of shares
of Common Stock (other than the Parent Companies) pursuant to this Agreement
is
fair from a
-9-
financial
point of view to such holders and such opinion will be included in the Proxy
Materials; (iii) determined that this Agreement and the transactions
contemplated hereby are in the best interests of the holders of shares of Common
Stock, and declared it advisable, to enter into this Agreement;
(iv) resolved to recommend adoption of this Agreement, the Merger and the
other transactions contemplated hereby to the holders of shares of Common Stock;
and (v) directed that such matters be submitted for consideration of the holders
of shares of Common Stock for their adoption (the matters described in clauses
(i), (iii), (iv) and (v), the “Recommendation”).
5.4. Consents
and Approvals; No Violations.
No
filing with or notice to, and no permit, authorization, registration, consent
or
approval of, any court or tribunal or administrative, governmental or regulatory
body, agency, authority or other entity (a “Governmental
Entity”)
is
required on the part of the Company or any of its Subsidiaries for the
execution, delivery and performance by the Company of this Agreement or the
consummation by the Company of the transactions contemplated hereby, except
(i)
as set forth in Section
5.4
of the
Company Disclosure Schedule; (ii) pursuant to the applicable requirements of
the
Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder the “Securities
Act”)
and
the Securities Exchange Act of 1934, as amended (including the rules and
regulations promulgated thereunder the “Exchange
Act”);
(iii)
the filing of the Certificate of Merger pursuant to the DGCL; (iv) compliance
with any applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the “HSR
Act”);
(v)
compliance with any applicable requirements of laws, rules and regulations
in
other foreign jurisdictions governing antitrust or merger control matters;
or
(vi) where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings or give such notice does not have and would
not reasonably be expected to have, either individually or in the aggregate,
a
Company Material Adverse Effect. Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will: (A) conflict with or result in any
breach, violation or infringement of any provision of the respective certificate
of incorporation or Bylaws (or similar governing documents) of the Company
or of
any its Subsidiaries; (B) result in a breach, violation or infringement of,
or
constitute (with or without due notice or lapse of time or both) a default
(or
give rise to the creation of any Lien or any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement
or
other instrument or obligation, whether written or oral (each a “Contract”),
to
which the Company or any of its Subsidiaries is a party or by which any of
them
or any of their respective properties or assets may be bound; (C) change the
rights or obligations of any party under any Contract; or (D) violate or
infringe any order, writ, injunction, judgment, arbitration award, agency
requirement, decree, law, statute, ordinance, rule or regulation, concession,
franchise, permit, license or other governmental authorization or approval
(each
a “Law”)
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets, except in the case of (B), (C) or (D) for breaches,
violations, infringements, defaults or changes which would not, individually
or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
5.5. Compliance
with Laws; Licenses.
-10-
(a) The
businesses of each of the Company and its Subsidiaries have been conducted
in
accordance with federal, state, local or foreign Laws, including Laws enforced
by the United States Food and Drug Administration (“FDA”)
or any
similar state or foreign regulatory or Governmental Entities in all material
respects. The Company is not debarred under the Federal Food, Drug and Cosmetic
Act or otherwise excluded from or restricted in any manner from participation
in, any government program related to pharmaceutical products and, to its
Knowledge, does not employ or use the services of any individual or entity
that
is or, during the time when such individual or entity was employed by or
providing services to the Company or any of its Subsidiaries, was debarred
or
otherwise excluded or restricted. No investigation or review by any Governmental
Entity with respect to the Company or any of its Subsidiaries is pending or,
to
the Knowledge of the Company, threatened, nor has any Governmental Entity
indicated an intention to conduct the same, except for such investigations
or
reviews that would not have, and would not reasonably be expected to have,
either individually or in the aggregate, a Company Material Adverse Effect.
(b) The
Company and its Subsidiaries each has all governmental permits, licenses,
franchises, variances, exemptions, orders issued or granted by a Governmental
Entity and all other authorizations, consents and approvals issued or granted
by
a Governmental Entity (“Licenses”)
necessary to conduct the business of the Company and its Subsidiaries as
presently conducted, except those the absence of which would not have, and
would
not reasonably be expected to have, either individually or in the aggregate,
a
Company Material Adverse Effect (the “Material
Licenses”).
There
is not pending or, to the Knowledge of the Company, threatened before any
Governmental Entity any proceeding, notice of violation, order of forfeiture
or
complaint or investigation against the Company or any of its Subsidiaries
relating to any Material License, in each case, except as would not have, and
would not reasonably be expected to have, either individually or in the
aggregate, a Company Material Adverse Effect.
(c) Each
of
the products, product candidates and active pharmaceutical ingredients of the
Company and its Subsidiaries is being, and at all times since January 1, 2003,
as applicable, has been, developed, tested, manufactured, handled, distributed,
and stored, as applicable, in compliance in all material respects with all
applicable Laws.
(d) The
Company has filed and made available to Parent each annual report filed by
any
of the Company and its Subsidiaries with the FDA and any similar state or
foreign regulatory or Governmental Entity with respect to any products of the
Company or its Subsidiaries or any similar state or foreign Governmental Entity
since January 1, 2003.
(e) Neither
the Company nor any of its Subsidiaries is subject to any pending or, to the
Knowledge of the Company, threatened, investigation by: (A) the FDA pursuant
to
its “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities,” set forth in 56 Fed. Reg. 46191 (September 10, 1991); (B)
Department of Health and Human Services Officer of Inspector General or
Department of Justice pursuant to the Federal Anti-Kickback Statute (42. U.S.C.
Section 1320a-7(b)) or the Federal False Claims Act (31 U.S.C. Section 3729
et
seq.);
or
(C) any equivalent statute of any country in the European Union. Neither the
Company nor any of its Subsidiaries, nor, to the Knowledge of the Company,
(1)
any officer or employee of the Company or any of its Subsidiaries, (2) any
authorized agent of the Company
or any of its
-11-
Subsidiaries
or (3) any principal investigator or sub-investigator of any clinical
investigation sponsored by the Company or any of its Subsidiaries has, in the
case of each of (1) through (3) on account of actions taken for or on behalf
of
the Company or any of its Subsidiaries, been convicted of any crime under 21
U.S.C. Section 335a(a) or any similar state or foreign Law or under 21 U.S.C.
Section 335a(b) or any similar state or foreign Law.
(f) Since
January 1, 2003, no clinical trial of a product of the Company or any of its
Subsidiaries has been suspended, put on hold or terminated prior to completion.
(g) There
are
no third party manufacturers or suppliers of the Company’s products, product
candidates and active pharmaceutical ingredients.
(h) The
Company has made available to Parent (A) complete and accurate copies of each
Investigational New Drug application (“IND”),
and
each similar state or foreign regulatory filing made by or on behalf of the
Company and its Subsidiaries, including all supplements and amendments, (B)
any
correspondence received from the FDA and similar state and foreign Governmental
Entities that concerns a product of the Company or its Subsidiaries covered
by
an IND described in clause (A) above, and (C) all existing written records
relating to all material discussions and all meetings between the Company or
its
Subsidiaries and the FDA or similar foreign regulatory or Governmental
Entities.
(i) Since
January 1, 2003, the clinical trials, animal studies and other preclinical
tests
conducted by or on behalf of the Company or its Subsidiaries were, and if still
pending, are, being conducted in all material respects in accordance with all
experimental protocols, informed consents, procedures and controls of the
Company and its Subsidiaries and applicable FDA requirements including, but
not
limited to, good clinical practice and good laboratory practice regulations.
Neither the Company nor any of its Subsidiaries has received any written notice
from the FDA or any other regulatory or Governmental Entity requiring the
material modification of any animal study, preclinical study or clinical trial
conducted by or on behalf of the Company or any Subsidiary.
(j) Neither
the Company nor any of its Subsidiaries or its Affiliates, nor, to the Knowledge
of the Company, any of its third party suppliers (with respect to a facility
producing materials for the Company or its Subsidiaries) has received a FDA
Form
483 notice or similar notice with respect to any production plants. A true
and
correct copy of any item set forth on Section 5.5(j) of the Company Disclosure
Schedule has been made available to Parent.
(k) Neither
the Company nor its Subsidiaries has knowingly or willfully solicited, received,
paid or offered to pay any remuneration, directly or indirectly, overtly or
covertly, in cash or kind for the purpose of making or receiving any referral
which violated any applicable anti-kickback or similar Law, including the
Federal Anti-Kickback Statute, or any applicable state anti-kickback
Law.
(l) The
Company and its Subsidiaries have not failed to comply with any applicable
security and privacy standards regarding protected health information under
the
Health Insurance Portability and Accountability Act of 1996, including the
regulations promulgated thereunder or any applicable state privacy Laws, except
for any such failures to
-12-
comply,
that have not had, and would not reasonably be expected to have, either
individually or in the aggregate, a Company Material Adverse Effect.
(m) With
respect to all third party manufacturers and suppliers of key raw materials
used
by the Company or its Subsidiaries (each a “Third
Party Manufacturer”),
the
Company has inspected all Third Party Manufacturers and to its Knowledge, each
such Third Party Manufacturer:
(i) has
complied and is complying in all material respects with all applicable Laws,
including Laws enforced by the FDA and any similar state or foreign regulatory
or Governmental Entities;
(ii) has
all
permits to perform its obligations as Third Party Manufacturer and all such
permits are in full force and effect, except as either individually or in the
aggregate, has not had, and would not reasonably be expected to have, a Company
Material Adverse Effect; and
(iii) has
not
been debarred under the Federal Food, Drug and Cosmetic Act or similar law
of
any other jurisdiction or otherwise excluded from or restricted in any manner
from participation in, any government program related to pharmaceutical products
and does not employ or use the services of any individual or entity that is
or,
during the time when such person or entity was providing services as a Third
Party Manufacturer to the Company or any of its Subsidiaries, was debarred
or
otherwise excluded or restricted.
(n) All
inventory of key starting material, reagents, active pharmaceutical ingredient
and/or product have been manufactured, handled, stored and distributed in
accordance with applicable Laws, including good manufacturing practice in all
material respects. The Company has sufficient inventory of key starting
materials, reagents, active pharmaceutical ingredients and/or products in order
to operate business in the ordinary course.
5.6. No
Default.
Neither
the Company nor any of its Subsidiaries is in default or violation (and no
event
has occurred which with notice or the lapse of time or both would constitute
a
default or violation) of any term, condition or provision of (i) its certificate
of incorporation or Bylaws (or similar governing documents), (ii) any Contract
to which the Company or any of its Subsidiaries is now a party or by which
any
of them or any of their respective properties or assets may be bound, or (iii)
any Law applicable to the Company, any of its Subsidiaries or any of their
respective properties or assets, except in the case of clause (ii) or (iii)
of
this sentence for violations, breaches or defaults that have not had, and would
not reasonably be expected to have, either individually or in the aggregate,
a
Company Material Adverse Effect.
5.7. Company
Reports; Financial Statements.
(a) The
Company has made available to Parent each registration statement, report, proxy
statement or information statement prepared by it since December 31, 2005,
including, without limitation, (i) the Company’s Annual Report on Form 10-K for
the year ended December 31, 2005 and (ii) the Company’s Quarterly Reports on
Form 10-Q for the periods
-13-
ended
March 31, 2006 and June 30, 2006 (the “Balance
Sheet Date”),
each
in the form (including any amendments thereto) filed with the Securities and
Exchange Commission (“SEC”).
The
Company has filed and furnished all forms, statements, reports and documents
required to be filed or furnished by it with the SEC pursuant to applicable
securities statutes, regulations, policies and rules since January 1, 2003
(the
forms, statements, reports and documents filed since January 1, 2003, or those
filed subsequent to the date of this Agreement, and as amended, the
“Company
Reports”).
The
Company Reports were prepared in all material respects in accordance with the
applicable requirements of the Securities Act and the Exchange Act and complied
in all material respects with the then applicable accounting standards. As
of
their respective dates (and, if amended, as of the date of such amendment),
the
Company Reports did not, and any Company Reports filed with the SEC subsequent
to the date of this Agreement 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 made therein, in light of the circumstances
in
which they were made, not misleading. There are no outstanding comment letters
or requests for information from the SEC with respect to any Company
Report.
(b) Each
of
the consolidated balance sheets included in or incorporated by reference into
the Company Reports (including the related notes and schedules) filed prior
to
the date of this Agreement fairly presents, and, if filed after the date of
this
Agreement, will fairly present, in each case, in all material respects, the
consolidated financial position of the Company or any other entity included
therein and their respective Subsidiaries, as of its date, and each of the
consolidated statements of operations, cash flows and of changes in
stockholders’ equity included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly presents, and, if
filed after the date of this Agreement, will fairly present, in all material
respects, the results of operations, retained earnings and changes in financial
position, as the case may be, of the Company or any other entity included
therein and their respective Subsidiaries for the periods set forth therein
(subject, in the case of unaudited financial statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect),
in
each case in accordance with U.S. generally accepted accounting principles
(“GAAP”)
consistently applied during the periods involved, except as may be noted
therein. The Company: (i) maintains disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) designed to ensure
that material information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
forms and is accumulated and communicated to the Company’s management as
appropriate to allow timely decisions regarding required disclosure and (ii)
has
disclosed, based on its most recent evaluation of such disclosure controls
and
procedures prior to the date hereof, to the Company’s auditors and the audit
committee of the Company Board (A) any significant deficiencies and material
weaknesses in the design or operation of internal controls over financial
reporting could adversely affect in any material respect the Company’s ability
to record, process, summarize and report financial information and (B) any
fraud, whether or not material, that involves management or other employees
who
have a significant role in the Company’s internal controls over financial
reporting. The Company has made available to Parent a summary of any such
disclosure made by management to the Company’s auditors and audit committee
since the Balance Sheet Date.
-14-
5.8. No
Undisclosed Liabilities.
There
are no liabilities of the Company or any of its Subsidiaries, whether accrued,
absolute, fixed or contingent, other than those: (i) set forth or adequately
provided for in the condensed consolidated balance sheet of the Company and
its
Subsidiaries included in the June 30, 2006 Form 10-Q of the Company; (ii)
incurred since the Balance Sheet Date in the ordinary course of business
consistent with past practice that have not had, or which would not reasonably
be expected to have either individually or in the aggregate, a Company Material
Adverse Effect; (iii) incurred under this Agreement or in connection with the
transactions contemplated hereby or (iv) which would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse
Effect.
5.9. Absence
of Certain Changes or Events.
Since
the Balance Sheet Date, there
has
not been any Company Material Adverse Effect or any event, occurrence,
discovery, effect, violation, inaccuracy, circumstance, state of facts or
development which has had, or would reasonably be expected to have or result,
either individually or in the aggregate, in a Company Material Adverse Effect,
and since the
Balance Sheet Date and through the date hereof,
the
Company and its Subsidiaries have conducted their business in the ordinary
course consistent with past practice, and neither the Company nor any of its
Subsidiaries has taken or authorized or agreed to the taking of any action
referred to in Sections 7.1(a)(i), 7.1(a)(vi) 7.1(a)(vii), 7.1(a)(viii),
7.1(a)(ix), 7.1(a)(xi), 7.1(a)(xii), 7.1(a)(xiii) and 7.1(a)(xiv).
5.10. Litigation.
There
is no civil, criminal or administrative suit, claim, inquiry, action, proceeding
or investigation (each an “Action”)
pending or, to the Knowledge of the Company, threatened in writing against
the
Company or any of its Subsidiaries or any of their respective properties or
assets, or any executive officer or director of the Company or any of its
Subsidiaries (in their capacity as an executive officer or director), or which
would make the Company or any of its Subsidiaries a party in such Action, which,
in any such case, if adversely determined or concluded, (i) involves an amount
in controversy in excess of $250,000 or (ii) has had or would reasonably be
expected to have, either individually or in the aggregate, a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is subject
to
any outstanding order, writ, injunction or decree. There is no outstanding
order
against the Company or any of its Subsidiaries or by which any property, asset
or operation of the Company or any of its Subsidiaries is bound. To the
Knowledge of the Company, as of the date of this Agreement, neither the Company,
any Subsidiary, nor any officer, director or employee of the Company or any
such
Subsidiary is under investigation by any Governmental Entity relating to the
conduct of the Company’s or any such Subsidiary’s business.
5.11. Significant
Contracts.
(a) True
and
correct copies have been made available to Parent of all Contracts to which
the
Company or any of its Subsidiaries is a party which are in effect as of the
date
hereof and fall within any of the following categories: (i) any Contract
required to be disclosed in a Company Report; (ii) any Contract relating to
indebtedness for borrowed money or any financial guaranty; (iii) any Contract
that limits the ability of the Company, its Subsidiaries or any of their
Affiliates to conduct or compete in any activity or business or in any
geographic area; (iv) any Contract that involves anticipated future expenditures
by the Company or any of its Subsidiaries of more than $250,000; (v) any joint
venture, manufacturing, research (other than “material transfer agreements”),
supply, collaboration or partnership Contract; (vi) any Contract
-15-
for
the
lease or purchase of real property; (vii) any Contract with any director,
officer or Affiliate of the Company or any of its Subsidiaries; and (viii)
any
Contract relating to the acquisition, development, license, transfer or
disclosure of Intellectual Property which Contract is material to the business
of the Company or any of its Subsidiaries other than “material transfer
agreements” in customary form entered into in the ordinary course of business
(collectively and with the IP Agreements, “Significant
Contracts”).
Section
5.11(a)
of the
Company Disclosure Schedule lists each Significant Contract of the Company
or
any of its Subsidiaries as of the date hereof.
(b) Each
of
the Significant Contracts are valid agreements and enforceable against the
Company, are in full force and effect and, upon consummation of the Merger,
shall continue in full force and effect without penalty, acceleration,
termination, repurchase right or other adverse consequence. The Company and
each
of its Subsidiaries has in all material respects performed all material
obligations required to be performed by it to date under each Significant
Contract. Neither the Company nor any of its Subsidiaries knows of, or has
received notice of, the existence of any event or condition which constitutes,
or, after notice or lapse of time or both, will constitute a default on the
part
of the Company or any of its Subsidiaries under any such Significant Contract,
except where such default has not had, and would not reasonably be expected
to
have, either individually or in the aggregate, a Company Material Adverse
Effect.
5.12. Disclosure
Documents.
The
proxy statement and all related SEC filings (the “Proxy
Materials”)
relating to the Merger and the other transactions contemplated hereby, to be
filed by the Company with the SEC in connection with seeking the adoption and
approval of this Agreement by the Company stockholders will not, at the date
first mailed to stockholders of the Company or at the time of the Stockholders’
Meeting (other than with respect to any information supplied by Parent or Merger
Sub for inclusion therein) contain any untrue statement of 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; provided,
however,
that
this representation and warranty shall not apply to any information so provided
by the Company that subsequently changes or becomes incomplete or incorrect
to
the extent such changes or failure to be complete or correct are promptly
disclosed to Parent, and the Company subsequently prepares, files or
disseminates updated information to the extent required by Law. The Company
will
cause the Proxy Materials to comply as to form in all material respects with
the
requirements of the Exchange Act applicable thereto. No representation is made
by the Company with respect to statements made in the Proxy Materials based
on
information supplied by Parent or Merger Sub specifically for inclusion
therein.
5.13. Employee
Benefit Plans.
(a) Section
5.13
of the
Company Disclosure Schedule sets forth a list of all material “employee benefit
plans,” as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”),
and
all other material plans, policies, agreements, programs and arrangements that
provide for compensation, retention, termination, severance, deferred
compensation, pension, retirement, employment, change in control, fringe or
any
other employee benefit or that provide for performance awards and stock or
stock-related awards, and that are maintained by the Company or any Subsidiary
of the Company, or to which the Company or any Subsidiary of the Company is
party thereto or
-16-
obligated
to contribute thereunder for current or former employees or directors of the
Company or any Subsidiary of the Company (the “Benefit
Plans”).
True,
correct and complete copies of the following documents, with respect to each
Benefit Plan, have been delivered or made available to Parent (in each case,
if
any): (i) current, accurate and complete copies of all documents embodying
or
relating to each Benefit Plan, including all amendments thereto, and trust
agreements with respect thereto; (ii) the two (2) most recent annual actuarial
valuations, if any, prepared for each Benefit Plan; (iii) the two (2) most
recent annual reports (Series 5500 and all schedules thereto), if any, required
under ERISA in connection with each Benefit Plan or related trust; (iv) the
most recent determination letter received from the Internal Revenue Service
(“IRS”),
if
any, for each Benefit Plan and related trust which is intended to satisfy the
requirements of Section 401(a) of the Code; (v) if the Benefit Plan is
funded, the most recent annual and periodic accounting of Benefit Plan assets;
(vi) the most recent summary plan description together with the most recent
summary of material modifications, if any, required under ERISA with respect
to
each Benefit Plan; and (vi) all material communications to any employee or
participant or employees or participants relating to each Benefit Plan that
will
be required to be described in a summary of material modifications.
(b) Neither
the Company nor any Subsidiary of the Company has adopted or announced any
plan
or commitment (other than any plan or commitment that has already been
completed) to establish any new material Benefit Plan, or to modify or to
terminate any Benefit Plan (except to the extent required by law or to conform
any such Benefit Plan to the requirements of any applicable law, in each case
in
a manner that would not have the effect of materially increasing benefits
thereunder, or as required or contemplated by this Agreement), nor has any
intention to do any of the foregoing been communicated to any Company directors,
consultants, independent contractors or employees.
(c) No
Benefit Plan is subject to Title IV of ERISA, and no circumstances exist that
could result in liability to the Company, any Subsidiary of the Company or
an
ERISA Affiliate under Title IV or Section 302 of ERISA, except for such
liability as would not, individually or in the aggregate, be material. At no
time during the last six years has the Company, any Subsidiary of the Company
or
any of their respective ERISA Affiliates contributed to or been required to
contribute to, or incurred any withdrawal liability (within the meaning of
Section 4201 of ERISA) to any Benefit Plan that is “multi-employer plan” within
the meaning of Sections 3(37) or 4001(a)(3) of ERISA. The term “ERISA
Affiliate”
means
any Person that is considered one employer with the Company under Section 4001
of ERISA or Section 414 of the Code. Neither the Company nor any Subsidiary
of
the Company maintains, is or will be required to provide, medical or other
welfare benefits to employees, directors, former employees, former directors
or
retirees after their termination of employment or service, other than pursuant
to applicable Law or benefits in the nature of severance pay with respect to
one
or more of the employment contracts set forth on Section
5.13
of the
Company Disclosure Schedule.
(d) Each
Benefit Plan that is intended to qualify under Section 401 of the Code, and
each
trust maintained pursuant thereto, has received a favorable determination letter
from the IRS.
-17-
(e) All
Benefit Plans were established and have been maintained and administered in
all
material respects in accordance with their terms and in accordance with all
applicable Laws. No “prohibited transaction," within the meaning of
Section 4975 of the Code or Section 406 of ERISA, has occurred with
respect to any Benefit Plan that would reasonably be expected to result in
any
material liability. No action or failure to act and no transaction or holding
of
any asset by, or with respect to, any Benefit Plan has or, to the Knowledge
of
the Company or any Subsidiary, reasonably would subject the Company, Parent,
any
Subsidiary of the Company or any ERISA Affiliate or any fiduciary to any
material tax, penalty or other liability, whether by way of indemnity or
otherwise. No event or transaction has occurred with respect to any Benefit
Plan
that would result in the imposition of any material tax under Chapter 43 of
Subtitle D of the Code. There are no pending or, to the Knowledge of the
Company, threatened claims against the Benefit Plans, any related trusts, any
Benefit Plan sponsor or plan administrator, or any fiduciary of the Benefit
Plans with respect to the operation of such plans (other than routine benefit
claims), except for such claims as have not been individually or in the
aggregate, and would not reasonably be expected to be, material. Except
as
would not, individually or in the aggregate, reasonably be expected to be
material, all
Benefit Plans subject to the laws of any jurisdiction outside of the United
States (i) if they are intended to qualify for special tax treatment meet all
requirements for such treatment and (ii) if they are intended to be funded
and/or book-reserved are fully funded and/or book reserved, as appropriate,
based upon reasonable actuarial assumptions.
(f) No
Benefit Plan is under audit or investigation by the IRS, the Department of
Labor, the Pension Benefit Guaranty Corporation or the Department of Health
and
Human Services and to the Knowledge of the Company or any Subsidiary of the
Company, no such audit or investigation is pending or threatened. To the
Knowledge of the Company, all Benefit Plans are, and have been maintained,
to
the extent applicable, in “good faith compliance” with Section 409A of the Code
(within the meaning of the preambles to the proposed regulations thereunder).
Each Benefit Plan can be amended, terminated or otherwise discontinued in
accordance with its terms (as in effect on the date hereof) without material
liability to the Company or any Subsidiary of the Company.
(g) Except
for (i) any acceleration of vesting specifically provided for or contemplated
by
this Agreement, (ii) any provision of a Benefit Plan disclosed in Section
5.13
of the
Company Disclosure Schedule, and (iii) the adoption of the severance plan
described in Section
7.8,
neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby (either alone or in conjunction with another
event, such as a termination of employment) will (i) result in any payment
becoming due to any current or former director or current or former employee
of
the Company or any of its Subsidiaries under any Benefit Plan or otherwise;
(ii)
increase any benefits otherwise payable under any Company Benefit Plan; or
(iii)
result in any acceleration of the time of payment or vesting of any such
benefits.
(h) There
is
no outstanding order against the Benefit Plans that is, and would reasonably
be
expected to be, material.
-18-
(i) There
is
no commitment covering any employee that, individually or in the aggregate,
would be reasonably likely to give rise to the payment of any amount that would
result in a material loss of tax deductions pursuant to Section 162(m) of the
Code.
(j) The
Company is not obligated, pursuant to any Benefit Plan or otherwise, to grant
any options to purchase shares of Company stock to any Employees, consultants
or
directors of the Company after the date hereof.
(k) All
contributions, reserves or premium payments required to be made or accrued
as of
the date hereof to the Benefit Plans have been timely made or accrued in all
material respects.
(l) The
Company and each Subsidiary of the Company (i) is in compliance in all
material respects with all applicable federal, state and local laws, rules
and
regulations (domestic and foreign) respecting employment, employment practices,
labor, terms and conditions of employment and wages and hours, in each case,
with respect to each of their current (including those on layoff, disability
or
leave of absence, whether paid or unpaid), former, or retired employees,
officers, consultants, independent contractors providing individual services,
agents or directors of the Company or any Subsidiary of the Company
(collectively, “Employees”);
and
(ii) is not liable for any material payment to any trust or other fund or
to any governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits for
Employees.
(m) No
work
stoppage or labor strike against the Company or any Subsidiary of the Company
by
Employees is pending or, to the Knowledge of the Company and its Subsidiaries,
threatened. Neither the Company nor any Subsidiary of the Company (i) is
involved in or, to the Knowledge of the Company and its Subsidiaries, threatened
with any material labor dispute, grievance, or litigation relating to labor
matters involving any Employees, including, without limitation, violation of
any
federal, state or local labor, safety or employment laws (domestic or foreign),
charges of unfair labor practices or discrimination complaints; (ii) has
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act; or (iii) is presently, nor has been in the past a party to,
or bound by, any collective bargaining agreement or union contract with respect
to Employees and no such agreement or contract is currently being negotiated
by
the Company. No Employees are currently represented by any labor union for
purposes of collective bargaining, and, to the Knowledge of the Company and
its
Subsidiaries, no activities the purpose of which is to achieve such
representation of all or some of such Employees are ongoing or threatened,
or
have resulted in any petition for a representation election filed with the
National Labor Relations Board in the past three months.
(n) The
Company and its Subsidiaries do not have any material liability, contingent
or
otherwise, to, or with respect to, any benefit plan (other than the Benefit
Plans listed on Section 5.13 of the Company Disclosure Schedule) that is now
or
previously has been sponsored, maintained, contributed to, or required to be
contributed to by, any ERISA Affiliate (other than one of the Company’s
Subsidiaries).
5.14. Intellectual
Property.
-19-
(a) Section
5.14
of the
Company Disclosure Schedule sets forth a true and complete list of all (i)
patents, patent applications, trademark registrations and applications therefor,
domain name registrations and copyright registrations and applications therefor,
in each case, included in the Owned Intellectual Property as of the date hereof
(“Owned
Registered Intellectual Property”),
except Owned Registered Intellectual Property that is not currently material
to
the Company’s or its Subsidiaries’ business and (ii) material Contracts relating
to the acquisition, transfer, development, license, sublicense and disclosure
of
Intellectual Property used or held for use by the Company or any of its
Subsidiaries, excluding Contracts relating to licensing generally available,
commercial software, research re-agents, kits, detection systems, instruments,
equipment, assays and the like (“IP
Agreements”).
(b) To
the
Knowledge of the Company, all Owned Registered Intellectual Property is valid,
subsisting and enforceable. No Owned Intellectual Property is subject to any
outstanding settlement, order, ruling, judgment or decree adversely affecting
the use thereof or rights thereto by the Company or any of its Subsidiaries.
The
Company and its Subsidiaries are the exclusive owner(s) or joint owner(s) of
all
Owned Intellectual Property free and clear of any encumbrances (excluding
licenses granted to third parties in the ordinary course of Company’s and its
Subsidiaries’ businesses). No Owned Registered Intellectual Property (except
Owned Registered Intellectual Property that is not currently material to the
Company’s or its Subsidiaries’ business) has lapsed, expired or been abandoned
or cancelled or nullified, or is currently subject to any pending, or
threatened, opposition, cancellation, nullification, interference, public
protest, domain name dispute, reexamination, reissue or other proceeding.
(c) To
the
Knowledge of the Company, the conduct of the business by the Company and its
Subsidiaries since January 1, 2003 has not infringed and does not infringe,
dilute, misappropriate or otherwise violate the Intellectual Property rights
of
any third Person in any material respect. Since January 1, 2003, no claim,
action, litigation or other proceeding has been asserted in writing, or to
the
Knowledge of the Company, threatened or any basis for threatening (including,
without limitation, cease and desist letters or offers for license), against
the
Company or any indemnitee of the Company concerning the ownership, validity,
registerability, enforceability, infringement, dilution, misappropriation,
use
or licensed right to use any Owned Intellectual Property, Licensed-In
Intellectual Property or other Intellectual Property rights of any third Person.
To the Knowledge of the Company, no third party is infringing, diluting,
misappropriating or violating the Owned Intellectual Property.
(d) Except
as
would not, individually or in the aggregate, reasonably be expected to have
a
Company Material Adverse Effect and except as a result of any agreements,
contracts, licenses and agreements that Parent or the Merger Sub is subject
to
prior to the consummation of the transactions contemplated by this Agreement,
the execution, delivery and performance by the Company of the transactions
contemplated by this Agreement will not (i) alter, impair, diminish or result
in
the loss of any rights or interests of the Company or any of its Subsidiaries
in
any Owned Intellectual Property or Licensed-In Intellectual Property, (ii)
grant
or require the Company or any of its Subsidiaries to grant to any Person any
rights with respect to any Owned Intellectual Property or Licensed-In
Intellectual Property, or (iii) subject the Company or any of its Subsidiaries
to any increase in or acceleration of royalties or other payments in respect
of
any Licensed-In Intellectual Property. The Company and its
Subsidiaries
-20-
have
taken and are now taking reasonable measures under the circumstances to maintain
the confidentiality of any material trade secrets constituting Owned
Intellectual Property.
(e) There
are
not ongoing interferences, oppositions, reissues, or reexaminations or other
inter-party proceedings which could reasonably be expected to result in a loss
or limitation of a patent right or claim involving any of the patents or patent
applications listed on Section 5.14 of the Company Disclosure Schedule and
owned
by the Company or any of its Subsidiaries that would reasonably be expected,
either individually or in the aggregate, to have a Company Material Adverse
Effect.
(f) All
personnel, including current and former employees, agents, consultants, officers
and contractors who have contributed to or participated in the conception and
development of any of the material Intellectual Property owned by the Company
or
any of its Subsidiaries either (A) have been party to a “work-for-hire”
arrangement or agreement with the Company or its Subsidiaries, whether in
accordance with applicable federal and state law, domestic or foreign, or
otherwise, that has accorded the Company or its Subsidiaries ownership of all
tangible and intangible property rights thereby arising, or (B) have executed
appropriate instruments of assignment in favor of the Company or its
Subsidiaries as assignees that have conveyed to the Company or its Subsidiaries
all of such Person’s rights in or to such Intellectual Property.
As
used
herein,
(1) “Intellectual
Property”
means,
collectively, all United States and non-United States (i) trademarks, service
marks, brand names, certification marks, collective marks, d/b/a’s, Internet
domain names, logos, symbols, trade dress, assumed names, fictitious names,
trade names and other indicia of origin, all applications and registrations
for
the foregoing, and all goodwill associated therewith and symbolized thereby,
including all renewals of same; (ii) inventions and discoveries, whether
patentable or not, and all patents, registrations (including statutory invention
registrations), invention disclosures, including all renewals, extensions,
re-examinations, reissues and supplemental protection certificates thereof
and
all applications for the foregoing, including all provisionals, divisions,
continuations, continuations-in-part and renewal applications; (iii) trade
secrets and confidential or proprietary information and know-how, including,
without limitation, compositions, processes, methods, data, schematics, business
methods, formulae, drawings, prototypes, models, designs, customer lists and
supplier lists; (iv) published and unpublished works of authorship, whether
copyrightable or not, copyrights therein and thereto, and registrations and
applications therefor, and all renewals, extensions, restorations and reversions
thereof, and (v) all other intellectual and industrial property not enumerated
or described above.
(2) “Licensed-In
Intellectual
Property”
means
the Intellectual Property which is licensed to or otherwise made available
for
use by the Company or any of its Subsidiaries pursuant to any Contracts for
Intellectual Property.
-21-
(3) “Owned
Intellectual Property”
means
the Intellectual Property owned by the Company or any of its Subsidiaries.
5.15. Taxes.
(i) The
Company and each of its Subsidiaries have prepared in good faith and duly and
timely filed (taking into account any valid extension of time within which
to
file) all material Tax Returns required to be filed by any of them and all
such
filed Tax Returns are complete and accurate in all material respects; (ii)
the
Company and each of its Subsidiaries have timely paid or caused to be paid
all
Taxes that are required to be paid by any of them (whether or not shown on
any
Tax Return) and the Company and each of its Subsidiaries have timely withheld
and paid all Taxes required to have been withheld and paid by any of them in
connection with any amounts paid or owing to any employee, independent
contractor, stockholder, creditor or other third party; (iii) all material
deficiencies asserted in writing or assessments made as a result of any
examinations or other audits by federal, state, local or foreign taxing
authorities have been paid in full, settled or adequately provided for in the
financial statements contained in the Company Reports filed on or prior to
the
date of this Agreement; (iv) no federal or material state, local or foreign
tax
audit or administrative or judicial proceeding is pending or being conducted
with respect to the Company or any of its Subsidiaries, and neither the Company
nor any of its Subsidiaries has received from any federal, state, local or
foreign taxing authority any written notice indicating an intent to open an
audit or other review; (v) there are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any material Tax
Return of the Company or any of its Subsidiaries; (vi) neither the Company
nor
any of its Subsidiaries is bound by any Tax sharing agreement with third
parties; (vii) neither the Company nor any of its Subsidiaries is a party to
any
“listed transaction” as defined in Treasury Regulation Section 1.6011-4(b)(2);
and (viii) neither the Company nor any of its Subsidiaries has any material
liability for the Taxes of any Person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any comparable
provision of state, local or foreign Law), as a transferee or successor, by
contract or otherwise.
5.16. No
Payments Not Deductible Pursuant to Section 280G.
Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in conjunction with
any
other event): (i) result in, cause the accelerated vesting, funding or delivery
of, or increase the amount or value of, any payment or benefit to any employee,
officer or director of the Company or any of its subsidiaries or (ii) result
in
the triggering or imposition of any restrictions or limitations on the right
of
the Company or Parent to amend or terminate any Benefit Plan and receive the
full amount of any excess assets remaining or resulting from such amendment
or
termination, subject to applicable taxes. Without limiting the generality of
the
foregoing, no amount paid or payable (whether in cash, in property, or in the
form of benefits) by the Company or any of its Subsidiaries in connection with
the transactions contemplated hereby (either solely as a result thereof or
as a
result of such transactions in conjunction with any other event) will be an
“excess parachute payment" within the meaning of Section 280G of the
Code.
5.17. Real
Property; Leasehold.
Neither
the Company nor any of its Subsidiaries own any real property or any interest
in
any real property, except for the leaseholds created under the real property
leases identified in Section 5.17 of the Company Disclosure Schedule. The
Company and each of its Subsidiaries have a valid leasehold in all real
property
-22-
and
other
material properties and assets leased by the Company or its Subsidiaries, in
each case free of all pledges, claims, liens, encumbrances and security
interests of any kind or nature whatsoever, except where the failure to have
such title does not have, and would not reasonably be expected to have, either
individually or in the aggregate, a Company Material Adverse
Effect.
5.18. Environmental
Matters.
a)
Except
as would not, individually or in the aggregate, reasonably be expected to have
a
Company Material Adverse Effect: (i) no real property (including soils,
groundwater, surface water, buildings or other structures thereon or thereunder)
owned, operated, used or occupied by the Company or any
of
its
Subsidiaries has been contaminated as a result of release, spill, discharge
or
disposal of any Hazardous Substance during or, to the Knowledge of the Company,
prior to, the ownership or operation or use by the Company or any of its
Subsidiaries, in each case that would be reasonably likely to require
investigation and/or remediation pursuant to Environmental Law; (ii) no real
property formerly owned or operated or used by the Company or any of its
Subsidiaries was contaminated as a result of release, spill, discharge or
disposal of any Hazardous Substance during or, to the Knowledge of the Company,
prior to, the ownership or operation or use by the Company or any of its
Subsidiaries, in each case that would be reasonably likely to require
investigation and/or remediation pursuant to Environmental Law; (iii) neither
the Company nor any of its Subsidiaries has received any written notice, demand,
letter, claim or request for information from any Governmental Entity or other
third party indicating that the Company or any of its Subsidiaries may be in
material violation of or subject to material liability under any Environmental
Law or arising from Hazardous Substances; (iv) neither the Company nor any
of
its Subsidiaries is subject to any material order, decree, injunction or other
arrangement with any Governmental Entity or is a party to any indemnity or
any
other agreement with any third party under any Environmental Law or otherwise
relating to any Hazardous Substances; and (v) the Company and its Subsidiaries
have obtained in a timely manner, maintained in effect, and are in material
compliance with, all Permits required by applicable Environmental Law in
connection with the business of the Company and its Subsidiaries.
(b) The
Company has delivered, or made available to Parent true and complete copies
and
results of any reports, studies, analyses, tests or monitoring possessed or
initiated by the Company pertaining to Environmental Law.
As
used
herein:
(i) The
term
"Environmental
Law"
means
any Law (including without limitation principles of common law, directives,
statutes, their implementing laws and regulations, related judicial and
administrative orders and binding legal interpretations thereof) applicable
to
the Company or any of its Subsidiaries relating to pollution or protection
of
the environment, natural resources, human health or safety, including without
limitation Laws relating to the generation, handling, use, presence,
transportation, recycling, take-back, disposal, release or threatened release
of
any Hazardous Substance.
(ii) The
term
"Hazardous
Substance"
means
any substances, mixtures, chemicals, products, materials or wastes that,
pursuant
-23-
to Environmental Law, are listed, classified, characterized, defined or regulated as hazardous, biohazardous, dangerous, infectious, toxic, a pollutant or a contaminant, including without limitation petroleum, petroleum products or by-products, friable asbestos, biological agents, genetically engineered or modified materials, blood-borne pathogens, bacterial or fungal materials, medical waste, unused or "off-spec" products, any material or equipment containing radon or other radioactive materials or polychlorinated biphenyls.
5.19. Insurance.
The
Company has made available to Parent accurate and complete copies of all
material insurance policies and all material self insurance programs and
arrangements relating to the business, assets, liabilities and operations of
the
Company and its Subsidiaries. To the Knowledge of the Company, each of such
insurance policies is in full force and effect. Since
January 1, 2005,
neither
the Company nor any of its Subsidiaries has received any notice or other
communication regarding any actual or possible: (a) cancellation or invalidation
of any insurance policy; (b) refusal or denial of any material coverage,
reservation of rights or rejection of any material claim under any insurance
policy; or (c) material adjustment in the amount of the premiums payable with
respect to any insurance policy.
5.20. Takeover
Statutes; Charter Provisions.
The
Company Board has approved the Merger, this Agreement and the Voting Agreements,
and such approval is sufficient to render inapplicable to the Merger, this
Agreement and the Voting Agreements the limitations on business combinations
contained in any restrictive provision of any “fair price,” “moratorium,”
“control share acquisition,” “interested stockholder” or other similar
anti-takeover statute or regulation (including, without limitation, Section
203
of the DGCL to the extent applicable) (“Takeover
Statute”)
or
restrictive provision of any applicable anti-takeover provision in the Company’s
Amended and Restated Certificate of Incorporation or Bylaws. No other state
takeover statute or similar statute or regulation or other comparable takeover
provision of the Company’s Amended and Restated Certificate of Incorporation or
Amended and Restated Bylaws applies to the Merger, this Agreement, the Voting
Agreements or any of the transactions contemplated hereby or
thereby.
5.21. Brokers.
No
broker, finder, investment banker or other third party other than Xxxxxxx,
Xxxxx
& Co., is entitled to any brokerage, finders’ or other fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of the Company or any of its Subsidiaries. The Company
has
made available to Parent a correct and complete copy of the Company’s engagement
letter with Xxxxxxx, Sachs & Co. applicable with respect to the
Merger.
5.22. Rights
Agreement.
The
Company Board has taken all requisite action such that none of Parent, Merger
Sub or any of their affiliates shall become an “Acquiring Person,” and no
“Shares Acquisition Date” or “Distribution Date” (as such terms are defined in
the Rights Agreement) will occur, solely by reason of the approval, execution
or
delivery of this Agreement or the Voting Agreements or the consummation of
the
transactions contemplated hereby or thereby and such that the Expiration Date
(as such term is defined in the Rights Agreement) will occur immediately prior
to the Effective Time.
-24-
5.23. Third
Party Supply.
As of
the date hereof, there are no outstanding forecasts or orders with respect
to
materials supplied or manufactured, or to be supplied or manufactured, by the
Company or any of its Subsidiaries to any third parties. No further orders
to
supply such materials to third parties are expected to be received by the
Company or any of its Subsidiaries.
ARTICLE
VI
Representations
and Warranties
of
Parent and Merger Sub
Parent
and Merger Sub hereby represent and warrant to the Company as
follows:
6.1. Organization,
Good Standing and Qualification.
Each of
Parent and Merger Sub is a corporation or other legal entity duly organized,
validly existing and in good standing under the Laws of the jurisdiction of
its
incorporation or organization and has all requisite corporate or other power
and
authority to own, lease and operate its properties and assets and to carry
on
its businesses as now being conducted and is qualified to do business and is
in
good standing as a foreign corporation in each jurisdiction where the ownership,
leasing or operation of its properties or assets or conduct of its business
requires such qualification, except where the failure to be so qualified or
in
good standing or to have such power or authority, would not, individually or
in
the aggregate, reasonably be expected to prevent or materially delay or
materially impair the ability of Parent or Merger Sub to consummate the Merger
and the other transactions contemplated by this Agreement. Parent has heretofore
delivered or made available to the Company accurate and complete copies of
the
Certificate of Incorporation and Bylaws (or similar governing documents), as
currently in effect, of Parent and Merger Sub.
6.2. Authority
Relative to this Agreement.
Each of
Parent and Merger Sub has all necessary corporate power and authority, and
has
taken all action necessary, to execute, deliver and perform under this Agreement
and to consummate the transactions contemplated hereby in accordance with the
terms hereof, except for the consent of Parent as sole stockholder of Merger
Sub, which will be effected by written consent immediately after the execution
of this Agreement. This Agreement has been duly and validly executed and
delivered by each of Parent and Merger Sub, and assuming due authorization,
execution and delivery hereof by the Company, constitutes a valid, legal and
binding agreement of each of Parent and Merger Sub, enforceable against each
of
Parent and Merger Sub in accordance with its terms except
for (i) the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium
and
similar laws relating to or affecting the rights of creditors generally and
(ii) the
effect of equitable principles of general application.
6.3. Consents
and Approvals; No Violations.
No
filing with or notice to, and no permit, authorization, registration, consent
or
approval of, any Governmental Entity is required on the part of Parent or Merger
Sub or any of their Subsidiaries for the execution, delivery and performance
by
Parent and Merger Sub of this Agreement or the consummation by Parent or Merger
Sub of the transactions contemplated hereby, other than (i) as set forth in
Schedule
6.3;
(ii)
pursuant to the applicable requirements of the Securities Act and the Exchange
Act; (iii) the filing of the Certificate of Merger pursuant to the DGCL; (iv)
compliance with the
-25-
HSR
Act;
(v) such filings or notices as may be required under any environmental, health
or safety Law (including any rules and regulations of the FDA) in connection
with the Merger; or (vi) compliance with any applicable requirements of laws,
rules and regulations in other foreign jurisdictions governing antitrust or
merger control matters.
6.4. Merger
Sub.
All of
the issued and outstanding capital stock of Merger Sub is, and at the Effective
Time will be, owned by Parent or a direct or indirect wholly-owned Subsidiary
of
Parent. Merger Sub was formed solely for the purpose of effecting the Merger.
Merger Sub has not conducted any business prior to the date hereof and has
no,
and prior to the Effective Time will have no, assets, liabilities or obligations
of any nature other than those incident to its formation and pursuant to this
Agreement and the Merger and the other transactions contemplated by this
Agreement.
6.5. Disclosure
Documents.
None of
the information supplied or to be supplied by Parent or Merger Sub specifically
for inclusion in the Proxy Materials, at the date it is first mailed to
stockholders of the Company or at the time of the Stockholders’ Meeting contain
any untrue statement of 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; provided,
however,
that
this representation and warranty shall not apply to any information so provided
by Parent or Merger Sub that subsequently changes or becomes incomplete or
incorrect to the extent such changes or failure to be complete or correct are
promptly disclosed to the Company, and Parent and Merger Sub reasonably
cooperate with the Company in preparing, filing or disseminating updated
information to the extent required by Law.
6.6. Availability
of Funds.
Parent
has on the date hereof sufficient funds and shall have available at the
Effective Time sufficient funds to enable it to consummate the
Merger.
6.7. Brokers.
No
broker, finder or investment banker is entitled to any brokerage, finders’ or
other fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of Parent or Merger Sub that would
be binding on the Company if the Agreement is terminated prior to
Closing.
6.8. Access.
Parent,
on behalf of itself and Merger Sub, has conducted its own independent
investigation of the Company and has, to its Knowledge, been furnished by the
Company, or its agents or representatives, with all information, documents
and
other materials relating to the Company, and its business, management,
operations and finances, that Parent and Merger Sub believe is necessary to
enter into this Agreement. In making its decision to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, Parent and
Merger Sub have relied solely upon the representations and warranties of the
Company set forth in Article V hereof and have not relied upon any other
information provided by, for or on behalf of the Company, or its agents or
representatives, to Parent or Merger Sub in connection with the transactions
contemplated by this Agreement.
-26-
ARTICLE
VII
Covenants
of the Parties
7.1. Operations
of the Company’s Business.
(a) Except
as
set forth in the corresponding section of the Company Disclosure Schedule,
as
otherwise contemplated hereby or as may be agreed in advance by Parent (and,
if
asked, Parent will not unreasonably delay its response), subject to applicable
Law, the Company covenants and agrees as to itself and its Subsidiaries that,
from the date of this Agreement until the Effective Time, the business of it
and
its Subsidiaries shall be conducted only in the ordinary course and, to the
extent consistent therewith, it and its Subsidiaries shall use their respective
commercially reasonable efforts to preserve its business organization intact
and
maintain its existing relations and goodwill with Governmental Entities,
customers, suppliers, distributors, creditors, lessors, employees and business
associates. Without limiting the generality of the foregoing and in furtherance
thereof, from the date of this Agreement until the Effective Time, except as
set
forth in the corresponding section of the Company Disclosure Schedule, as
otherwise contemplated hereby or as may be agreed in advance by Parent (and,
if
asked, Parent will not unreasonably delay its response), subject to applicable
Law and the regulations or requirements of any stock exchange or regulatory
organization applicable to the Company, the Company will not and will not permit
its Subsidiaries to:
(i) adopt
or
propose any change in its certificate of incorporation or Bylaws (or similar
governing documents);
(ii) merge
or
consolidate the Company or any of its Subsidiaries with any other Person, except
for any such transactions among wholly-owned Subsidiaries of the Company that
are not obligors or guarantors of third party indebtedness;
(iii) acquire
assets outside of the ordinary course of business from any other Person with
a
value or purchase price in the aggregate in excess of $100,000 other
than acquisitions pursuant to Contracts to the extent in effect immediately
prior to the execution of this Agreement and set forth in Section
7.1(a)(iii)
of the
Company Disclosure Schedule or as otherwise set forth in Section
7.1(a)(iii)
of the
Company Disclosure Schedule;
(iv) other
than pursuant to Contracts set forth in Section
7.1(a)(iv)
of the
Company Disclosure Schedule, and other than the issuance of shares of Common
Stock upon the exercise of Company Stock Options outstanding on the date hereof,
granted pursuant to the terms of this Agreement or pursuant to the ESPP, in
each
case, in accordance with their terms, as in effect on the date hereof, issue,
sell, pledge, dispose of, grant, transfer, lease, license, guarantee, encumber,
or authorize the issuance, sale, pledge, disposition, grant, transfer, lease,
license, guarantee or encumbrance of, any shares of capital stock of the Company
or any of its Subsidiaries or securities convertible or exchangeable or
exercisable for any shares of such capital stock, or any options, warrants
or
other rights of any kind to acquire any shares of such capital stock or such
convertible or exchangeable securities (other than the grant of Company Stock
Options to
-27-
new
hires
in the ordinary course of business consistent with past practice in an amount
not to exceed 50,000 per 30-day period and 200,000 in the
aggregate);
(v) create
or
incur any Lien on assets of the Company or any of its Subsidiaries that is
material, individually or in the aggregate, to the Company and its Subsidiaries
taken as a whole;
(vi) other
than pursuant to Contracts to the extent in effect as of immediately prior
to
the execution of this Agreement and set forth in Section
7.1(a)(vi)
of the
Company Disclosure Schedule, make any loan, advance or capital contribution
to
or investment in any Person (other than a wholly-owned Subsidiary of the
Company) in excess of $100,000 in
the
aggregate;
(vii) declare,
set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock (except
for dividends or other distributions by any direct or indirect wholly-owned
Subsidiary of the Company to the Company or to any other direct or indirect
wholly-owned Subsidiary of the Company and periodic dividends and other periodic
distributions by non-wholly-owned Subsidiaries in the ordinary course consistent
with past practices) or enter into any agreement with respect to the voting
of
its capital stock;
(viii) reclassify,
combine, split, subdivide or redeem, purchase or otherwise acquire, directly
or
indirectly, any of its capital stock or securities convertible or exchangeable
into or exercisable for any shares of its capital stock except the
acceptance of shares of Common Stock as payment of the exercise price of stock
options or for withholding taxes incurred in connection with the exercise of
Company Stock Options or the vesting of restricted stock or other Company
stock-based awards, in each case in accordance with past practice and the terms
of the applicable award;
(ix) incur
any
indebtedness for borrowed money or guarantee such indebtedness of another
Person, or issue or sell any securities or warrants or other rights to acquire
any security of the Company or any of its Subsidiaries, except for indebtedness
for borrowed money incurred in the ordinary course of business not to exceed
$100,000 in
the
aggregate;
(x) except
as
set forth in Section
7.1(a)(x)
of the
Company Disclosure Schedule or as provided for in the Company’s 2006 capital
expenditure budget (attached to Section
7.1(a)(x)
of the
Company Disclosure Schedule), make or authorize any capital expenditure in
excess of $200,000;
(xi) make
any
changes with respect to financial accounting policies or procedures, except
as
required by changes in GAAP or by Law;
(xii) commence
any litigation or settle any litigation or other proceeding or other
investigation by or against the Company or any Subsidiary of the Company or
relating to any of their businesses, properties or assets, other than
settlements (A) entered into in the ordinary course of business consistent
with
past practice, (B) requiring of the Company and its Subsidiaries only the
payment of monetary damages not exceeding
-28-
$75,000,
(C) not involving the admission of any wrongdoing by, the Company or any of
its
Subsidiaries and (D) which would not be reasonably likely to have any adverse
impact on the operations of the Company or any of its Subsidiaries or on any
current or future litigation or other proceedings of the Company;
(xiii) sell,
lease, license or otherwise dispose of any assets of the Company or its
Subsidiaries except for ordinary course sales of products or services provided
in the ordinary course of business or obsolete assets, and except for sales,
leases, licenses or other dispositions of assets with a fair market value not
in
excess of $50,000 in
the
aggregate, other than pursuant to Contracts in effect prior to the execution
of
this Agreement and set forth in Section
7.1(a)(xiii)
of the
Company Disclosure Schedule or as otherwise set forth in Section
7.1(a)(xiii)
of the
Company Disclosure Schedule;
(xiv) except
as
required pursuant to existing written, binding agreements or Benefit Plans
in
effect prior to the execution of this Agreement set forth in Section
7.1(a)(xiv)
of the
Company Disclosure Schedule, or as otherwise required by Law or in the ordinary
course of business consistent with past practice with respect to new hires,
enter into, or commit to enter into any new employment or compensatory
agreements (including, but not limited to, the renewal of any consulting
agreement) with any employee, consultant or director of the Company or any
of
its Subsidiaries (including entering into any bonus, severance, change of
control, termination, reduction-in-force or consulting agreement or other
employee benefits arrangement or agreement pursuant to which such Person has
the
right to any form of compensation from the Company or any of its Subsidiaries),
or, except for annual merit increases in the ordinary course of business
consistent with past practice for employees of the Company or its Subsidiaries
other than officers, senior managers or directors, increase the compensation
and
employee benefits of any employee, consultant or director of the Company or
any
of its Subsidiaries, or adopt or amend any Benefit Plan in any respect that
would increase the cost of such Benefit Plan to the Company, or accelerate
vesting or payment under, any Benefit Plan;
(xv) engage
in
the conduct of any new line of business, other than as expressly permitted
by
Section
7.1(a)(xv)
of the
Company Disclosure Schedule;
(xvi) make
or
change any Tax election, file any amended Tax Return (except as required by
applicable Law), enter into any closing agreement with respect to Taxes, settle
any Tax claim or assessment, surrender any right to claim a refund of Taxes,
or
consent to any extension or waiver of the limitation period for the assessment
of any Tax;
(xvii) enter
into any material agreement with respect to any of its owned or Licensed-in
Intellectual Property or with respect to the intellectual property of any third
party;
(xviii) (A)
enter
into, modify or amend in a manner adverse to the Company or any of its
Subsidiaries, or terminate, any Significant Contract (or Contract
-29-
that
would be a Significant Contract if such Contract had been entered into prior
to
the date hereof) or any material manufacturing or supply agreement for any
of
the Company’s products or compounds or (B) waive, release or assign any material
rights or claims thereunder;
(xix) create
any new Subsidiaries; or
(xx) agree,
resolve or commit to do any of the foregoing; provided,
however,
that
the foregoing covenants shall not prevent the Company and its Subsidiaries
from
undertaking transactions between or among themselves.
7.2. Acquisition
Proposals.
(a) The
Company agrees that neither it nor any of its Subsidiaries nor any of the
officers and directors of it or its Subsidiaries shall, and that it shall not
permit its and its Subsidiaries’ employees, agents and representatives
(including any investment banker, attorney, consultant or accountant
(“Representatives”)
retained by it or any of its Subsidiaries) on its behalf to, initiate, solicit
or knowingly encourage any inquiries or the making of any proposal or offer
from
any Person or group of Persons other than Parent or its affiliates, with respect
to: (i) a merger, reorganization, share exchange, consolidation, business
combination, plan of liquidation or similar transaction involving the Company;
(ii) any purchase of 15% or more of any class of voting securities of the
Company or its Subsidiaries; or (iii) any purchase or sale of 15% or more of
the
equity interest in the Company or the consolidated assets (on a book value
basis) of the Company and its Subsidiaries, taken as a whole (any such proposal
or offer being hereinafter referred to as an “Acquisition
Proposal”).
The
Company further agrees that neither it nor any of its Subsidiaries nor any
of
the officers and directors of it or its Subsidiaries shall, and that it shall
not permit its and its Subsidiaries’ Representatives to, (i) engage in any
discussions or negotiations with, or provide any confidential or non-public
information or data to, any Person relating to an Acquisition Proposal; (ii)
knowingly encourage any effort or attempt to make or implement an Acquisition
Proposal; (iii) approve, recommend, agree to or accept, or propose to approve,
recommend, agree to or accept any Acquisition Proposal; (iv) approve, recommend,
agree to or accept, or execute or enter into, any letter of intent, agreement
in
principle, merger agreement, acquisition agreement, option agreement or other
similar agreement related to any Acquisition Proposal; (v) withdraw, modify,
qualify or change the Recommendation or (vi) resolve, propose or agree to do
any
of the foregoing. The Company agrees that it, and its Subsidiaries will
immediately cease and cause to be terminated, and it will not permit its
Representatives to continue, any existing activities, discussions or
negotiations with any Persons with respect to any Acquisition Proposal (except
with respect to the transactions contemplated by this Agreement).
(b) Nothing
contained in this Agreement shall prevent the Company or the Company Board
from
(x) complying with its disclosure obligations under Sections 14d-9 and
14e-2 of the Exchange Act with regard to an Acquisition Proposal so long as
any
action taken or statement made to so comply does not include a withdrawal,
modification, qualification or change of the Recommendation in a manner adverse
to Parent that is made in contravention of Section 7.3(b) (provided, however,
that any “stop, look and listen” or similar communication of the type
contemplated by Rule 14d-9(f) under the Exchange Act shall not be deemed to
be
a
-30-
withdrawal,
modification, qualification or change of the Recommendation in a manner adverse
to Parent) and (y) at any time prior to, but not after, the conditions set
forth
in Section 8.1(a) has been satisfied, and as long as there has not been a
material or intentional failure to comply with any of the obligations under
this
Section 7.2 with respect to the applicable Acquisition Proposal
(A) providing information in response to a request therefor by a Person who
has made an unsolicited bona fide written Acquisition Proposal if the Company
receives from the Person so requesting such information an executed
confidentiality agreement on terms no less restrictive on such Person than
the
terms contained in the Confidentiality Agreement, and concurrently discloses
the
same non-public information to Parent if such non-public information has not
been previously disclosed to Parent; (B) engaging in any negotiations or
discussions with any Person who has made an unsolicited bona fide written
Acquisition Proposal if the Company receives from such Person an executed
confidentiality agreement as described in (A) above; or (C) withdrawing,
modifying, qualifying or changing the Recommendation so as to recommend such
an
unsolicited bona fide written Acquisition Proposal to the stockholders of the
Company, if and only to the extent that (I) in each case referred to in
clause (A), (B) or (C) above, the Company Board determines in good faith,
after consultation with its outside legal counsel, that such action is required
to comply with the Company directors’ fiduciary duties to stockholders of the
Company under applicable Law, (II) in each case referred to in
clause (A), (B) or (C) above, the Company Board determines in good faith
after consultation with its outside legal counsel and financial advisors that
such Acquisition Proposal constitutes, or is reasonably likely to lead to,
an
Acquisition Proposal (which, for all such purposes, shall substitute 50% for
15%
in the definition thereof) that, if accepted, is reasonably likely to be
consummated, and if consummated, would result in a more favorable transaction
(taking into account legal, financial, regulatory and other aspects of such
Acquisition Proposal and the Merger and other transactions contemplated by
this
Agreement deemed relevant by the Company Board, the identity of the third party
making such Acquisition Proposal, the terms and conditions of the Acquisition
Proposal and the anticipated timing and prospects for completion of such
Acquisition Proposal) to the Company’s stockholders than the transaction
contemplated by this Agreement (taking into account all of the terms of any
proposal by Parent to amend or modify the terms of the Merger and other
transactions contemplated by this Agreement) (any such more favorable
Acquisition Proposal is referred to in this Agreement as a “Superior
Proposal”),
and
(III) in the case of clause (C) above, (i) Parent shall have been provided
by
the Company prompt written notice of (x) the Company Board’s intention to take
the action referred to in clause (C) and (y) the material terms and conditions
of the Acquisition Proposal, including the identity of the party making such
Acquisition Proposal, and, if available, a copy of the relevant proposed
transaction agreements with such party and other material documents, (ii) the
Company shall have given Parent four business days after delivery of such notice
to propose revisions to the terms of this Agreement (or make another proposal)
and shall have negotiated in good faith with Parent with respect to such
proposed revisions or other proposal, if any and (iii) the Company Board shall
have determined in good faith, after considering the results of such
negotiations and giving effect to the proposals made by Parent, if any, and
after consultation with its outside legal counsel, that such withdrawal,
modification, qualification or change of the Recommendation is required to
comply with its fiduciary obligations to the stockholders of the Company under
applicable Law; provided, further that in the event the Company Board does
not
make the determination referred to in clause (iii) of this paragraph but
thereafter determines to withdraw, modify, qualify or change the Recommendation
pursuant to this Section 7.2, the procedures referred to in clauses
-31-
(i),
(ii)
and (iii) shall apply anew and shall also apply to any subsequent withdrawal,
modification, qualification or change.
(c) The
Company agrees that it will notify Parent promptly (and in any event within
24
hours of the Company gaining Knowledge thereof) if any Acquisition Proposal,
or
any inquiry or indication that would reasonably be expected to lead to any
Acquisition Proposal, by any Person is received by, any non-public information
relating to the Company or any of its Subsidiaries is requested by such a Person
from, or any inquiry, discussions or negotiations regarding any Acquisition
Proposal are sought to be initiated by such a Person with, the Company, its
Subsidiaries or any of its Representatives. Such notice shall include the
identity of the person making such Acquisition Proposal, indication, inquiry
or
request and a copy of such Acquisition Proposal, indication, inquiry or request
(or, where no such copy is available, a description of such Acquisition
Proposal, indication, inquiry or request), including any modifications thereto.
The Company shall keep Parent reasonably informed on a current basis (and in
any
event within 24 hours of the occurrence of any material changes, developments,
discussions or negotiations) of the status of any such Acquisition Proposal,
indication, inquiry or request and of any material changes in the status and
terms of any such Acquisition Proposal, indication, inquiry or request
(including the material terms and conditions thereof). Without limiting the
foregoing, the Company shall promptly (and in any event within 24 hours) notify
Parent orally and in writing if it determines to initiate actions concerning
an
Acquisition Proposal as permitted by Section 7.2(b) (y) (A) and (B). The Company
shall not, and shall cause it Subsidiaries not to, enter into any
confidentiality agreement with any Person subsequent to the date of this
Agreement which prohibits the Company from providing such information to Parent.
7.3. Stockholder
Meeting; Proxy Material.
(a) The
Company shall duly call and shall use its commercially reasonable efforts to
hold a meeting of its stockholders (the “Stockholders’
Meeting”)
for
the purpose of obtaining the approval of this Agreement and the Merger by the
Company stockholders required to satisfy the conditions set forth in Section
8.1(a) as promptly as practicable following the date of this Agreement. In
connection with the Stockholders’ Meeting, the Company will (i) as promptly as
practicable following the date of this Agreement, prepare and file with the
SEC
the Proxy Materials to the Merger and the other transactions contemplated
hereby; (ii) respond as promptly as reasonably practicable to any comments
received from the SEC with respect to such filings and will provide copies
of
such comments to Parent and Merger Sub promptly upon receipt; (iii) as promptly
as reasonably practicable, prepare and file (after Parent and Merger Sub have
had a reasonable opportunity to review and comment on) any amendments or
supplements necessary to be filed in response to any SEC comments or as required
by Law; (iv) use its commercially reasonable efforts to have cleared by the
SEC,
and will thereafter mail to its stockholders as promptly as reasonably
practicable, the Proxy Materials and all other customary proxy or other
materials for meetings such as the Stockholders’ Meeting; (v) to the extent
required by applicable Law, as promptly as reasonably practicable prepare,
file
and distribute to the Company stockholders any supplement or amendment to the
Proxy Materials if any event shall occur which requires such action at any
time
prior to the Stockholders’ Meeting; and (vi) otherwise comply with all
requirements of Law applicable to the Stockholders’ Meeting and the Merger. The
Company will provide Parent and Merger Sub an opportunity to review and comment
upon the Proxy Materials, or any
-32-
amendments
or supplements thereto, or any SEC comments received with respect thereto,
prior
to filing the same with the SEC.
(b) The
written consent of Parent will be required to adjourn or postpone the
Stockholders’ Meeting; provided, that, in the event that there is present at
such meeting, in person or by proxy, sufficient favorable voting power to secure
the Company Requisite Vote, the Company will not adjourn or postpone the
Stockholders’ Meeting unless the Company is advised by counsel that failure to
do so would result in a breach of the U.S. federal securities laws. Unless
the
Company Board has changed its Recommendation pursuant to its fiduciary duties
under applicable Law and in compliance with Section 7.2(b), the Recommendation
of the Company Board shall be included in the Proxy Materials, and the Company
Board shall take all reasonable action to secure the adoption of this Agreement
by the holders of shares of Common Stock.
7.4. Commercially
Reasonable Efforts; Cooperation.
(a) Upon
the
terms and subject to the conditions of this Agreement, each of Parent, Merger
Sub and the Company agrees to use its commercially reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under any applicable Laws to consummate and
make
effective the transactions contemplated hereby as promptly as practicable
including, but not limited to, (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the transactions
contemplated hereby (including making or causing to be made the filings required
under the HSR Act as promptly as practicable and in any event within fifteen
(15) business days after the date of this Agreement); (ii) cooperating with
the
other in connection with the preparation and filing of any such forms,
registrations and notices (including, with respect to the party hereto making
a
filing, providing copies of all such documents to the non-filing party and
its
advisors prior to filing and, if requested, to accept all reasonable additions,
deletions or changes suggested in connection therewith) and in connection with
obtaining any requisite approvals, consents, orders, exemptions or waivers
by
any third party or Governmental Entity; (iii) the satisfaction of the conditions
to the consummation of the Merger set forth in Article VIII; and (iv) the
execution of any additional instruments, including the Certificate of Merger,
necessary to consummate the transactions contemplated hereby. Subject to the
terms and conditions of this Agreement and the applicable provisions of the
DGCL, each party hereto agrees to use commercially reasonable efforts to cause
the Effective Time to occur as soon as practicable after the adoption by the
stockholders of the Company of the Merger, this Agreement the other transactions
contemplated by this Agreement at the Stockholders’ Meeting. In case at any time
after the Effective Time any further action is necessary to carry out the
purposes of this Agreement, the officers and directors of each party hereto
shall use commercially reasonable efforts to take all such necessary
action.
(b) The
Company and Parent each shall, upon request by the other, furnish the other
with
all information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Materials or any other statement, filing, notice
or
application made by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any third party and/or any Governmental Entity in
connection with the Merger and the transactions contemplated by this
Agreement.
-33-
(c) Subject
to applicable Law, the Company and Parent each shall promptly furnish the other
with copies of notices or other communications between Parent or the Company,
as
the case may be, or any of their respective Subsidiaries, and any Governmental
Entity with respect to such transactions. The Company shall give prompt notice
to Parent of (i) any written communication from (x) any Governmental Entity
and
(y) any counterparty to any Significant Contract that alone, or together with
all other Significant Contracts with respect to which such written communication
is received, is material to the Company and its Subsidiaries, taken as a whole,
alleging that the consent of such party is or may be required in connection
with
the transactions contemplated by this Agreement (and the responses thereto
from
the Company, its Subsidiaries or its Representatives), (ii) any written
communication from any Governmental Entity in connection with the transactions
contemplated by this Agreement (and the responses thereto from the Company,
its
Subsidiaries or its Representatives), (iii) any Action commenced against or
otherwise affecting the Company or any of its Subsidiaries that are related
to
the transactions contemplated by this Agreement (and the response thereto from
the Company, its Subsidiaries or its Representatives), or (iv) any failure
of
any condition to Parent’s obligations to effect the Merger, and Parent shall
give prompt notice to the Company of any change, fact or condition that is
reasonably likely to result in a failure of any condition to the Company’s
obligation to effect the Merger. No party hereto shall independently participate
in any meeting, or engage in any substantive conversation, with any Governmental
Entity with respect to the transactions contemplated hereby without giving
the
other party hereto prior notice of the meeting and, to the extent permitted
by
such Governmental Entity, the opportunity to attend and/or participate. The
parties hereto shall consult and cooperate with one another in connection with
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions
and proposals made or submitted to any Governmental Entity by or on behalf
of
any party hereto in connection with the transactions contemplated hereby.
7.5. Access.
Subject
to applicable Laws relating to the sharing of information, upon reasonable
notice, the Company shall, and shall cause its Subsidiaries to, afford Parent,
and its officers, employees, counsel, accountants and other authorized
Representatives, reasonable access, during normal business hours throughout
the
period prior to the Effective Time, to its properties, books, contracts and
records and, during such period, the Company shall, and shall cause its
Subsidiaries to, furnish promptly to Parent all information concerning its
business, properties and personnel as may reasonably be requested. At the
request of Parent, throughout the period prior to the Effective Time, the
Company shall use its commercially reasonable efforts to obtain waivers from
Persons who are parties to Contracts with the Company or its Subsidiaries that
contain confidentiality provisions in order for Parent to be provided reasonable
access to such Contracts.
7.6. Consents.
Subject
to other provisions contained in this Agreement, Parent, Merger Sub and the
Company each will use commercially reasonable efforts to obtain consents of
all
third parties and Governmental Entities necessary, proper or advisable for
the
consummation of the transactions contemplated hereby; provided, however, that
without the prior written consent of Parent, the Company and its Subsidiaries
may not pay or commit to pay any material amount of cash or other consideration,
or incur or commit to incur any material liability or other obligation, in
connection with obtaining such consent, approval or waiver.
-34-
7.7. Public
Announcements.
The
initial press release regarding the Merger shall be a joint press release
mutually agreed upon, and thereafter Parent and the Company will consult with
one another before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated hereby, including
the
Merger, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
Law or by obligations pursuant to any listing agreement with any national
securities exchange or the NASDAQ Global Market, as determined in good faith
by
such party.
7.8. Employee
Benefits.
(a) Parent
agrees that it shall cause the Surviving Corporation to honor each Benefit
Plan
in accordance with its terms as in effect immediately before the Effective
Time,
subject to any amendment or termination thereof that may be permitted by such
terms. For a period from the Effective Time through at least one (1) year from
Closing, Parent shall provide, or shall cause to be provided, to those
individuals who as of the Effective Time were employees (other than employees
subject to collective bargaining agreements) of the Company and its Subsidiaries
(the “Affected
Employees”)
pension, health, life insurance, disability and vacation benefits (the
“Employee
Plan Benefits”)
that
are no less favorable in the aggregate to those Employee Plan Benefits
provided to the Affected Employees immediately before the Effective Time.
Notwithstanding the foregoing, but subject to Section 7.8(c), nothing contained
herein shall obligate Parent, the Surviving Corporation or any of their
affiliates to maintain any particular Benefit Plan or retain the employment
of
any Affected Employee.
(b) Each
Affected Employee shall receive credit for his or her service with the Company
and its Subsidiaries (and their respective predecessors) before the Effective
Time under the employee benefit plans of Parent and its affiliates (other than
the Company and its Subsidiaries) providing Employee Plan Benefits to any
Affected Employees after the Effective Time (the “New
Plans”)
for
purposes of eligibility, vesting and benefit accrual to the same extent as
such
Affected Employee was entitled, before the Effective Time, to credit for such
service under any comparable Benefit Plans (except to the extent such credit
would result in a duplication of accrual of benefits); provided that,
notwithstanding the forgoing, such service shall only be recognized to the
extent the service would be recognized under the New Plan had the service been
performed at the Parent; and provided
further
that (i)
with respect to any pension plan, such service credit will only be recognized
by
the Parent for purposes of vesting and not for purposes of benefit accrual
or
early retirement subsidies; and (ii) with respect to retiree health benefits,
such service credit will only be recognized for service performed past the
age
of forty (40). In addition, and without limiting the generality of the
foregoing: (i) at the Effective Time, each Affected Employee immediately shall
be eligible to participate, without any waiting time, in any and all New Plans
to the extent coverage under such New Plan replaces coverage under a similar
or
comparable Company Benefit Plans in which such Affected Employee participated
immediately before the Effective Time to the extent permissible by any
applicable insurance carrier or vendor; (ii) with respect to the calendar year
in which the Effective Time occurs, for purposes of each New Plan providing
welfare benefits to any Affected Employee, Parent shall cause all pre-existing
condition exclusions of such New Plan to be waived for such Affected Employee
and his or her covered dependents; and (iii) each
Affected
-35-
Employee
and their eligible dependents shall receive credit for the plan year in which
the Effective Time (or commencement of participation in a New Plan) occurs
towards applicable deductibles and annual out-of-pocket limits for expenses
incurred prior to the Effective Time (or the date of commencement of
participation in a New Plan).
(c) Not
later
than five business days prior to the Stockholders’ Meeting, Company shall adopt
a severance plan consistent with the terms set forth in Section 7.8(c) of the
Company Disclosure Schedule for the benefit of the Affected Employees. Parent
agrees that it shall maintain, or cause to be maintained, such severance plan
for a period of two years following the Closing Date.
(d) The
Company shall take all actions necessary to ensure that all Company Stock
Options that the Company or its Subsidiaries are obligated to grant, as of
the
date hereof, to any employee, consultant or director of the Company or any
of
its Subsidiaries at any time after the date hereof shall be fully granted to
such employee, consultant or director prior to the Closing Date.
(e) With
respect to the ESPP, the Company shall take all actions necessary such that
no
more than 20,000 shares of Common Stock may be issued in the aggregate in any
individual Offering Period that begins after the date hereof.
(f) Without
limiting the generality of Section 10.8, nothing herein expressed or implied
shall confer upon any current or former employee of the Company or any of its
Subsidiaries or upon any representative of any such person, or upon any
collective bargaining agent, any rights or remedies, including any third party
beneficiary rights or any right to employment or continued employment for any
specified period, of any nature or kind whatsoever under or by reason of this
Agreement.
7.9. Indemnification;
Directors’ and Officers’ Insurance.
(a) The
indemnification, advancement and exculpation provisions of the Company’s Amended
and Restated Certificate of Incorporation, the Company’s Amended and Restated
Bylaws and those certain Indemnification Agreements by and among the Company
and
its directors and certain executive officers, as in effect at the Effective
Time
shall not be amended, repealed or otherwise modified for a period of six (6)
years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were directors,
officers or employees of the Company. Parent shall cause the Surviving
Corporation to comply with all such indemnification, advancement and exculpation
provisions.
(b) The
Surviving Corporation shall and Parent shall cause the Surviving Corporation
to
maintain the Company’s and its Subsidiaries’ existing directors’ and officers’
liability insurance (including for acts or omissions occurring in connection
with this Agreement and the consummation of the transactions contemplated
hereby) covering each Person covered as of the Effective Time by the Company’s
officers’ and directors’ liability insurance policy (each such Person, an
“Indemnified
Party”)
on
terms with respect to coverage and amount no less favorable than those of such
policy in effect on the date hereof for a period of six (6) years after the
Effective Time; provided,
however,
that,
subject to the
-36-
immediately
succeeding sentence, in no event shall the Surviving Corporation be required
to
expend in any one (1) year an amount in excess of 250% of the current annual
premium paid by the Company for such insurance (such 250% amount, the
“Maximum
Annual Premium”);
provided,
further,
that if
the annual premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding the Maximum Annual Premium. In addition,
the
Company may and, at Parent’s request, the Company will, purchase a six (6)-year
“tail” prepaid policy prior to the Effective Time on terms and conditions no
less advantageous to the Indemnified Parties than the existing directors’ and
officers’ liability insurance maintained by the Company; provided, that the
amount paid by the Company shall not exceed three times the Maximum Annual
Premium. If such “tail” prepaid policies have been obtained by the Company prior
to the Closing, the Surviving Corporation shall, and Parent shall cause the
Surviving Corporation to, maintain such policies in full force and effect,
and
continue to honor the respective obligations thereunder, and all other
obligations under this Section 7.9(b) shall terminate.
(c) If
Parent, the Surviving Company or any of their respective successors or assigns
1) consolidates with or merges into any other Person and shall not be the
continuing or surviving company or entity of such consolidation or merger,
or 2)
transfers or conveys all or substantially all of its properties and assets
to
any Person, then the obligations of Parent or the Surviving Company, as the
case
may be, that are set forth under this Section 7.9 shall survive, and to the
extent necessary, proper provision shall be made so that the successors and
assigns of Parent or the Surviving Company, as the case may be, shall assume
the
obligations set forth in this Section 7.9. Parent shall be responsible for
any
breach by the Surviving Company of the provisions of this Section
7.9.
(d) The
provisions of this Section 7.9 are intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Parties and their heirs and
legal representatives.
7.10. Takeover
Statutes.
If any
Takeover Statute is or may become applicable to the Merger or the other
transactions contemplated by this Agreement, the Company and the Company Board
(or any other appropriate committee of the Company Board) shall grant all
approvals and use their commercially reasonable efforts to take all actions
as
are necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise act to
eliminate or minimize the effects of such Takeover Statute on such
transactions.
7.11. Rights
Plan.
The
Company Board shall take all further action (in addition to that referred to
in
Section 5.23) reasonably requested by Parent in order to render the Rights
issued pursuant to the Rights Agreement inapplicable to the Merger and the
other
transactions contemplated by this Agreement. Except as provided above with
respect to the Merger and the other transactions contemplated by this Agreement,
the Company Board shall not, without the prior written consent of Parent, (a)
amend the Rights Agreement or (b) take any action with respect to, or make
any
determination under, the Rights Agreement, including a redemption of the Rights,
to facilitate an Acquisition Proposal in any manner adverse to
Parent.
-37-
7.12. Confidentiality.
Parent,
Merger Sub and the Company hereby acknowledge that Parent and the Company have
previously executed a Confidentiality Agreement, dated as of March 28, 2006,
as
amended (the “Confidentiality
Agreement”),
which
will continue in full force and effect in accordance with its
terms.
7.13. Resignations.
To the
extent requested by Parent in writing prior to the Closing, on the Closing
Date,
the Company shall use commercially reasonable efforts to cause to be delivered
to Parent duly signed resignations, effective as of the Effective Time, of
the
directors of the Company and the Subsidiaries designated by Parent.
7.14. Stockholder
Litigation.
The
Company shall give Parent the opportunity to participate in the defense or
settlement of any stockholder litigation against the Company and/or its
directors relating to the transactions contemplated hereby, and no such
litigation shall be settled without Parent’s prior written consent.
ARTICLE
VIII
Conditions
to Merger
8.1. Conditions
to the Obligations of the Company, Parent and Merger Sub to Effect the
Merger.
The
respective obligation of each of the Company, Parent and Merger Sub to effect
the Merger is subject to the satisfaction or waiver at or prior to the Closing
of each of the following conditions:
(a) Stockholder Approval.
This
Agreement and the transactions contemplated hereby, including the Merger, shall
have been duly adopted by holders of shares of Common
Stock
constituting the Company Requisite Vote in accordance with applicable Law and
the Company’s Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws.
(b) Regulatory
Consents.
(i) The waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been earlier terminated and
(ii)
all other governmental consents listed on Section
8.1(b)
of the
Company Disclosure Schedule required to be obtained prior to the Effective
Time
by the Company or Parent or any of their respective Subsidiaries shall have
been
obtained and shall remain in full force and effect.
(c) No
Injunction.
No
court or other Governmental Entity of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any Law, rule, regulation, judgment,
determination, decree, injunction or other order that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger or the
other transactions contemplated by this Agreement (collectively, an
“Injunction”).
8.2. Conditions
to Obligations of Parent and Merger Sub.
The
obligation of Parent and Merger Sub to effect the Merger is also subject to
the
satisfaction or waiver by Parent at or prior to the Closing of the following
conditions:
-38-
(a) Representations
and Warranties.
The
representations and warranties of the Company contained in Section 5.2
(Capitalization
of the Company and its Subsidiaries)
shall be
true and correct in all respects except for such inaccuracies as are de minimis
in the aggregate (A) on the date of this Agreement and (B) at and as of the
Closing Date with the same force and effect as if made as of such date (except
to the extent that such representation and warranty speaks as of a particular
date, in which case such representation and warranty shall be true and correct
in all material respects as of such earlier date). All other representations
and
warranties of the Company contained in Article V shall be true and correct
in
each case (A) on the date of this Agreement and (B) at and as of the Closing
Date with the same force and effect as if made as of such date (except to the
extent that such representation and warranty speaks as of a particular date,
in
which case such representation and warranty shall be true and correct in all
respects as of such earlier date), except for failures of such representations
and warranties to be true and correct that have not had, and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect (it being understood that for purposes of determining
the accuracy of the representations and warranties described in this sentence,
all materiality and Company Material Adverse Effect qualifications contained
in
such representations and warranties shall be disregarded); and Parent shall
have
received at the Closing a certificate signed on behalf of the Company by a
senior executive officer of the Company to the effect that the conditions set
forth in this Section 8.2 have been satisfied.
(b) Performance
of Obligations of the Company.
The
Company shall have performed in all material respects the agreements and
obligations required to be performed by it under this Agreement at or prior
to
the Closing Date, and Parent shall have received a certificate signed on behalf
of the Company by a senior executive officer of the Company to the effect that
the condition set forth in this Section 8.2(b) has been satisfied.
(c) Company
Material Adverse Effect. Except
as
set forth in the Company Disclosure Schedule, since the date of this Agreement,
there shall not have been any Company Material Adverse Effect or any event,
state of fact, circumstance, development, change or effect that would,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
8.3. Conditions
to Obligation of the Company.
The
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company at or prior to the Effective Time of
the
following conditions:
(a) Representations
and Warranties.
The representations and warranties of Parent and Merger Sub set forth in
this Agreement shall be true and correct in all material respects on the Closing
Date with the same effect as though such representations and warranties had
been
made on and as of the Closing Date (except to the extent that any such
representation and warranty expressly speaks as of an earlier date, in which
case such representation and warranty shall be true and correct as of such
earlier date) and the Company shall have received at the Closing a certificate
signed on behalf of each of Parent and Merger Sub by a senior executive officer
of each to the effect that the condition set forth in this Section 8.3(a)
has been satisfied.
(b) Performance
of Obligations of Parent and Merger Sub.
Each of
Parent and Merger Sub shall have performed in all material respects the
agreements and obligations
-39-
required
to be performed by it under this Agreement at or prior to the Closing Date,
and
the Company shall have received a certificate signed on behalf of each of Parent
and Merger Sub by a senior executive officer of each to the effect that the
condition set forth in this Section 8.3(b) has been satisfied.
ARTICLE
IX
Termination
9.1. Termination by Mutual Consent.
This
Agreement may be terminated and the Merger may be abandoned at any time prior
to
the Effective Time, whether before or after the adoption by the stockholders
of
the Company referred to in Section 8.1(a), by mutual written consent of the
Company and Parent.
9.2. Termination
by Either Parent or the Company.
This
Agreement may be terminated and the Merger may be abandoned at any time prior
to
the Effective Time by Parent or by the Company if (a) the Merger shall not
have been consummated by June 30, 2007 (the “Termination
Date”);
(b) the adoption by the Company’s stockholders required by
Section 8.1(a) shall not have been obtained at the Stockholders’ Meeting
(after giving effect to all adjournments or postponements thereof); or
(c) any Injunction permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and non-appealable;
provided,
that
the right to terminate this Agreement pursuant to Section 9.2(a) shall not
be available to any party if the circumstances described in Section 9.2(a)
were
caused by such party’s failure to comply with its obligations under this
Agreement.
9.3. Termination
by the Company.
This
Agreement may be terminated and the Merger may be abandoned at any time, but,
in
the case of clause (a) below, only prior to the adoption by stockholders of
the
Company referred to in Section 8.1(a), by action of the Company Board (a)(i)
if
the Company Board shall have withdrawn, qualified or changed the Recommendation
in a manner adverse to Parent and in favor of a Superior Proposal in the manner
provided for in, and in compliance with, Section 7.2 (including, without
limitation the right of Parent to propose revisions to the terms of this
Agreement) and (ii) contemporaneously with such termination, the Company enters
into a definitive acquisition, merger or similar agreement to effect the
Superior Proposal and (iii) contemporaneously therewith, the Company pays to
Parent the amount specified in Section 9.5(b); or (b) if there has been a
breach of any representations, warranties, covenants or agreements made by
Parent or Merger Sub in this Agreement, or any such representations and
warranties shall have become untrue or incorrect after the execution of this
Agreement, such that (i) the condition set forth in either Section 8.3(a)
or 8.3(b) would not be satisfied and (ii) such breach or failure to be true
and
correct is not cured within 20 business days following receipt of written notice
of such breach or failure from Company; provided, however, that the failure
of
any such condition to be capable of satisfaction is not the result of a material
breach of this Agreement by the Company.
9.4. Termination
by Parent.
This
Agreement may be terminated and the Merger may be abandoned at any time prior
to
the Effective Time by action of the Board of Directors of Parent (a)(i) if
the
Company Board shall have withdrawn, modified, qualified or changed the
Recommendation in a manner adverse to Parent or (ii) if the Company
Board
-40-
approves,
endorses or recommends any Acquisition Proposal other than the Merger or (iii)
if the Company or the Company Board resolves or announces its intention to
do
any of the foregoing, in the case of any of (i), (ii) or (iii) whether or not
permitted by Section 7.2; (b) if the Company (i) materially breaches its
obligations under Section 7.2 or 7.3(b), or the Company Board or any committee
thereof shall resolve to do any of the foregoing, or (ii) materially breaches
its obligations under Section 7.3(a) and such breach is not cured within 10
days
after the Company’s receipt of written notice asserting such breach or failure
from Parent; or (c) if there has been a breach of any other representation,
warranty, covenant or agreement made by the Company in this Agreement, or any
such representation and warranty shall have become untrue or incorrect after
the
execution of this Agreement, such that (i) the condition set forth in either
Section 8.2(a) or 8.2(b) would not be satisfied and (ii) such breach or failure
to be true or correct is not cured within 20 business days following receipt
of
written notice of such breach or failure from Parent; provided, however, that
the failure of any such condition to be capable of satisfaction is not the
result of a material breach of this Agreement by Parent.
9.5. Effect
of Termination and Abandonment; Termination Fee.
(a) In
the
event of a termination of this Agreement and the abandonment of the Merger
pursuant to this Article IX, this Agreement (other than the Company’s
obligation pursuant to Section 9.5(b), if applicable and Article X), shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its directors, officers, employees, agents, legal and financial
advisors or other representatives); provided,
however,
that,
no such termination shall relieve any party hereto of any liability or damages
resulting from any willful or intentional breach of this Agreement.
(b) In
the
event that (i) this Agreement is terminated by the Company pursuant to Section
9.3(a) or Parent pursuant to Section 9.4(a) or 9.4(b) or (ii) this Agreement
is
terminated by the Company or Parent pursuant to Section 9.2(a) or 9.2(b) and
(x)
an Acquisition Proposal (but substituting “50%” for “15%” in the definition of
such term) (an “Alternative
Transaction”)
shall
have been made public and not been withdrawn prior to the time of the
Stockholders’ Meeting (or at any adjournment thereof), and (y) the Company
enters into a definitive agreement with respect to any Alternative Transaction
within 12 months from the date of such termination or an Alternative Transaction
is consummated within 12 months from the date of such termination, then in
the
case of either of the foregoing subclauses (i) or (ii) the Company shall pay
Parent (A) simultaneously with such termination in the event of a termination
by
the Company described in clause (b)(i), (B) on the second business day following
termination by Parent described under clause (b)(i) and (C) upon such fee
becoming payable under clause (b)(ii), by wire transfer of same day funds,
a fee
equal to $42,100,000 (the
“Termination
Fee”);
provided,
however,
that,
in the event that (1) this Agreement is terminated pursuant to Section 9.2(a)
and an Alternative Transaction is subsequently consummated with or a definitive
agreement with respect to an Alternative Transaction is subsequently entered
into during the twelve-month period following termination with a Person other
than the Person making the Alternative Transaction at the time of such
termination and (2) the consideration per share of Common Stock to be paid
in
such Alternative Transaction is less than the Merger Consideration, then the
Termination Fee will be discounted in the same proportion as the consideration
to be paid in the Alternative Transaction is less than the Merger Consideration.
For purposes of this Section 9.2(b)(iii), the “consideration per share
of
-41-
Common
Stock” shall be determined as follows: (x) if the consideration consists of
cash, such amount of cash, (y) if the consideration consists of marketable
securities, the value of such marketable securities at the close of business
on
the day before the date such Alternative Transaction is consummated or a
definitive agreement with respect to such Alternative Transaction is entered
into, as the case may be, and (z) if the consideration is in a form other than
cash or marketable securities, such value as the parties shall reasonably agree.
ARTICLE
X
Miscellaneous
and General
10.1. Non-Survival
of Representations and Warranties and Agreements.
None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time or, except
as set forth in Section 9.5 hereof, the termination of this Agreement pursuant
to the terms hereof. This Section 10.1 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Effective
Time.
10.2. Modification
or Amendment.
Subject
to the provisions of applicable Law, at any time prior to the Effective Time,
(i) this Agreement may be amended, modified or supplemented only in writing
executed by each of the parties hereto by action of the Board of Directors
of
each such party (whether before or after the Company Requisite Vote) and (ii)
any provisions herein may be waived only in writing executed by the party or
parties against whom such waiver is asserted by action of such party or parties’
Board of Directors.
10.3. Waiver
of Conditions.
The
conditions to each of the parties’ obligations to consummate the Merger are for
the sole benefit of such party and may be waived by such party in whole or
in
part to the extent permitted by applicable Law, in such party’s sole
discretion.
10.4. Counterparts;
Signatures.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which together shall be considered one and the
same agreement and shall become effective when counterparts have been signed
by
each of the parties hereto and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. This Agreement
may be executed and delivered by facsimile transmission.
10.5. GOVERNING
LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.
The
parties hereto hereby irrevocably submit exclusively to the jurisdiction of
the
Court of Chancery of the State of Delaware and the Federal courts of the United
States of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the
transactions
-42-
contemplated
hereby, and hereby waive, and agree not to assert, as a defense in any action,
suit or proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in said courts or that the venue
thereof may not be appropriate or that this Agreement or any such document
may
not be enforced in or by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding shall be heard and
determined in such a Delaware State or Federal court. The parties hereto hereby
consent to and grant any such court jurisdiction over the person of such parties
for purposes of the foregoing.
(b) EACH
PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (iii)
EACH
PARTY MAKES THIS WAIVER VOLUNTARILY; AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.5.
10.6. Notices.
Any
notice, request, instruction or other document to be given hereunder by any
party to the others shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid, facsimile or by overnight
courier:
If
to
Parent or Merger Sub:
Merck
& Co., Inc.
Xxx
Xxxxx
Xxxxx
X.X.
Xxx
000, XX0X-00
Whitehouse
Station, New Jersey 08889-0100
Attention:
Office
of
the Secretary
Facsimile:
(000)
000-0000
with
a
copy, which will not constitute notice, to:
Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
Xxx
Xxx
Xxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx
X.
Shine/Xxxxx X. Xxxxxxx
Facsimile:
(000)
000-0000
-43-
If
to the
Company:
Sirna
Therapeutics, Inc.
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention:
President & CEO
Facsimile:
(000)
000-0000
With
a
copy to:
Sirna
Therapeutics, Inc.
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention:
Vice
President of Legal Affairs
Facsimile:
(000)
000-0000
with
a
copy, which will not constitute notice, to:
O’Melveny
& Xxxxx LLP
0000
Xxxx
Xxxx Xxxx
Xxxxx
Xxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxx
X. Xxxxxxx/Xxx Xxxxxx
Facsimile:
(000)
000-0000
or
to
such other persons or addresses as may be designated in writing by the Person
to
receive such notice as provided above. Any
notice, request, instruction or other document given as provided above shall
be
deemed given to the receiving party upon actual receipt, if delivered
personally; three (3) business days after deposit in the mail, if sent by
registered or certified mail; upon confirmation of successful transmission
if
sent by facsimile; or on the next business day after deposit with an
internationally recognized overnight courier, if sent by such a
courier.
10.7. Entire
Agreement.
This
Agreement, together with the schedules and Annexes hereto, and the
Confidentiality Agreement and Voting Agreements constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral,
between the parties with respect to the subject matter hereof.
10.8. No
Third Party Beneficiaries.
Except
as expressly set forth in Section 7.9 (Indemnification;
Directors’ and Officers’ Insurance) of this Agreement, this Agreement is not
intended to, and does not, confer upon any Person other than the parties who
are
signatories hereto any rights or remedies hereunder.
10.9. Severability.
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. If any provision of this
Agreement, or the application thereof to any Person or any circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable the remaining provisions hereof, shall, subject to
-44-
the
following sentence, remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to either party. Upon such determination, the parties shall negotiate
in
good faith in an effort to agree upon such a suitable and equitable provision
to
effect the original intent of the parties.
10.10. Interpretation;
Absence of Presumption.
(a) For
the
purposes hereof, (1) words in the singular shall be held to include the plural
and vice
versa
and
words of one gender shall be held to include the other gender as the context
requires; (2) the terms “hereof,”
“herein,”
and
“herewith”
and
words of similar import shall, unless otherwise stated, be construed to refer
to
this Agreement as a whole (including the schedules and annexes hereto) and
not
to any particular provision of this Agreement, and Article, Section, paragraph,
Schedule and Annex references are to the Articles, Sections, paragraphs,
Schedules and Annexes to this Agreement unless otherwise specified; (3) the
word “including”
and
words of similar import when used in this Agreement shall mean “including
without limitation”
unless
the context otherwise requires or unless otherwise specified; (4) the word
“or”
shall
not be exclusive; (5) provisions shall apply, when appropriate, to
successive events and transactions; and (6) all references to any period of
days shall be deemed to be to the relevant number of calendar days unless
otherwise specified.
(b) The
parties have participated jointly in negotiating and drafting this Agreement.
In
the event that an ambiguity or a question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the parties, and
no
presumption or burden of proof shall arise favoring or disfavoring any party
by
virtue of the authorship of any provision of this Agreement.
10.11. Expenses.
Except
as otherwise provided in Section 9.5, whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement and the Merger
and the other transactions contemplated by this Agreement shall be paid by
the
party incurring such expense.
10.12. Assignment.
This
Agreement shall not be assignable by any party hereto; provided,
however,
that
Parent may designate, by written notice to the Company, another Subsidiary
of
Parent to be a constituent corporation in lieu of Merger Sub, whereupon all
references herein to Merger Sub shall be deemed references to such other
Subsidiary, except that all representations and warranties with respect to
Merger Sub as of the date of this Agreement shall be deemed representations
and
warranties with respect to such other Subsidiary as of the date of such
designation. Any purported assignment in violation of this Agreement will be
void ab
initio.
10.13. Attorneys’
Fees.
In any
action at law or suit in equity to enforce this Agreement or the rights of
any
of the parties hereunder, the prevailing party in such action or suit shall
be
entitled to receive a reasonable sum for its attorneys’ fees and all other
reasonable costs and expenses incurred in such action or suit.
-45-
10.14. Certain
Definitions.
The
following terms, as used herein, have the meanings which meanings shall be
applicable equally to the singular and plural of the terms defined:
(a) an
"Affiliate"
of any
Person means another person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
such first Person, where “control” means the possession, directly or indirectly,
of the power to direct or cause the direction of the management policies of
a
Person, whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise.
(b) “Company
Material Adverse Effect”
means
any change or effect, event, violation, circumstance, occurrence, state of
facts
or development (any such item, an“Effect”)
that,
(i) is materially adverse to the business, assets, results of operations or
financial condition of the Company and its Subsidiaries, taken as a whole,
or
(ii) would prevent or delay beyond the Termination Date the consummation by
the
Company of the transactions contemplated hereby; provided that no Effect related
to or arising out of any of the following shall be taken into account in
determining whether there may exist a Company Material Adverse Effect:
(A)
circumstances generally affecting the biotechnology industry (which changes
or
developments, in each case, do not materially disproportionately affect the
Company and its Subsidiaries taken as a whole); (B) changes affecting the United
States economy in general (which changes or developments, in each case, do
not
materially disproportionately affect the Company and its Subsidiaries taken
as a
whole) or the financial or securities markets in general, political instability
or political conditions in the United States or any acts of terrorism, military
actions or war or other national calamity directly involving the United States;
(C) other than with respect to Section 5.4 (Consents
and Approvals; No Violations),
the
announcement or pendency of this Agreement or actions pursuant to (or required
by) this Agreement; (D) any change in the Company’s stock price or trading
volume (it being understood that any change in the Company underlying or
contributing to such change in stock price or trading volume may be taken into
account in determining whether there exists a Company Material Adverse Effect);
(E) any determination by, or delay of a determination by, or delay of a
submission to, the FDA or its European equivalent, or any panel or advisory
body
empowered or appointed thereby; (F) the failure by the Company to meet any
internal or published projections, forecasts or revenue or earnings predictions
for any period (it being understood that any change in the Company underlying
or
contributing to such failure may be taken into account in determining whether
there exists a Company Material Adverse Effect); (G) any changes in applicable
Law or GAAP (which changes, in each case, do not materially disproportionately
affect the Company and its Subsidiaries taken as a whole); or (H) any effect
resulting from the actions of Parent or any of its affiliates.
(c) “Knowledge”
shall
mean, with respect to a party hereto, and with respect to any matter in
question, that any executive officer of such party has actual knowledge of
such
matter.
(d) “Lien”
means,
with respect to any asset (including any security) any option, claim, mortgage,
lien, pledge, charge, security interest or encumbrance or restrictions of any
kind in respect of such asset.
-46-
(e) “Person”
shall
mean any individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity or other entity of any kind
or
nature.
(f) “Subsidiary”
shall
mean, with respect to any party, any corporation, limited liability company,
partnership or similar entity, whether domestic or foreign to the United States,
of which (x) such party or any other Subsidiary of such party is a general
partner or (y) at least a majority of the securities (or other interests having
by their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization) is, directly or indirectly, owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
(g) “Tax”
or
“Taxes”
means
all taxes (whether federal, state, local or foreign) including, without
limitation, all income, profits, franchise, gross receipts, stamp, payroll,
employment, use, property, withholding, excise and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties
and
additions imposed with respect to such amounts.
(h) “Tax
Return”
means
all returns, forms, reports and other documentation required to be filed with,
or supplied to, any federal, state, local or foreign tax authority with respect
to Taxes (and any amendments, supplements and supporting documentation
thereto).
[Remainder
of Page Intentionally Left Blank]
-47-
IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly
authorized officers of the parties hereto as of the date first written
above.
SIRNA
THERAPEUTICS, INC.
By:
/s/
Xxxxxx X. Xxxxx
Name:
Xxxxxx X. Xxxxx
Title:
President and Chief Executive Officer
MERCK
& CO., INC.
By:
/s/
Xxxxxxx X. Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title:
Chief Executive Officer and
President
SPINNAKER
ACQUISITION CORP.
By:
/s/
Xxxxxxx X. Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title:
President
