EXHIBIT 99.2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and
entered into as of August 4, 1999, by and among: CYPROS PHARMACEUTICAL
CORPORATION, a California corporation ("Parent"); CYPROS ACQUISITION
CORPORATION, a Delaware corporation and a wholly owned subsidiary of Parent
("Merger Sub"); and RIBOGENE, INC., a Delaware corporation (the "Company").
Certain capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company in accordance with this Agreement and the
Delaware General Corporation Law (the "Merger"). Upon consummation of the
Merger, Merger Sub will cease to exist, and the Company will become a wholly
owned subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Code. For financial reporting
purposes, it is intended that the Merger be accounted for as a "purchase."
C. The respective boards of directors of Parent, Merger Sub and the
Company have approved and adopted this Agreement and approved the Merger.
D. In order to induce Parent and the Company to enter into this
Agreement and to consummate the Merger, certain shareholders of Parent and
stockholders the Company are entering into Voting Agreements pursuant to
which they are agreeing to vote in favor of the adoption and approval of this
Agreement and the approval of the Merger.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time
(as defined in Section 1.3), Merger Sub shall be merged with and into the
Company, and the separate existence of Merger Sub shall cease. The Company
will continue as the surviving corporation in the Merger (the "Surviving
Corporation").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of the Delaware
General Corporation Law (the "DGCL").
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the
offices of Xxxxxx Godward LLP, located at 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000,
Xxx Xxxxx, Xxxxxxxxxx, at 10:00 a.m. on a date to be mutually agreed by the
parties (the "Closing Date"), which shall be no later than
the second business day after the satisfaction or waiver of the conditions
set forth in Sections 6 and 7. Contemporaneously with or as promptly as
practicable after the Closing, the parties hereto shall cause a properly
executed certificate of merger conforming to the requirements of the DGCL
(the "Certificate of Merger") to be filed with the Secretary of State of the
State of Delaware. The Merger shall take effect at the time the Certificate
of Merger is filed with the Secretary of State of the State of Delaware or at
such later time as may be specified in the Certificate of Merger (the
"Effective Time").
1.4 CHARTERS AND BYLAWS; DIRECTORS AND OFFICERS. Unless otherwise
determined by Parent and the Company prior to the Effective Time:
(a) Parent shall take all necessary actions, including
expanding the size of its board of directors, such that the directors and
officers of Parent immediately after the Effective Time shall be the
individuals identified on Exhibit B;
(b) the Articles of Incorporation of Parent shall be amended
and restated as of the Effective Time to (i) increase the authorized common
stock and preferred stock of Parent, (ii) establish blank check preferred
stock, (iii) designate the rights, preferences and privileges of the Parent
Preferred Stock, and (iv) effect such other amendments as are set forth in
the form of Amended and Restated Articles of Incorporation attached hereto as
Exhibit C (the "Amended Articles"), and the Bylaws of Parent shall be amended
and restated as of the Effective Time to increase the authorized number of
directors on the Board of Directors;
(c) the Certificate of Incorporation of the Surviving
Corporation shall be amended and restated as of the Effective Time to conform
to the Certificate of Incorporation of Merger Sub as in effect immediately
prior to the Effective Time;
(d) the Bylaws of the Surviving Corporation shall be amended
and restated as of the Effective Time to conform to the Bylaws of Merger Sub
as in effect immediately prior to the Effective Time; and
(e) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the respective individuals
identified in Exhibit B.
1.5 CONVERSION OF SECURITIES.
(a) Subject to Sections 1.5(b) through (e), at the Effective
Time, by virtue of the Merger and without any further action on the part of
Parent, Merger Sub, the Company or any stockholder of the Company:
(i) any shares of Company Common Stock then held by
the Company or any Subsidiary of the Company (or held in the Company's
treasury) shall be canceled and retired and shall cease to exist at the
Effective Time, and no consideration shall be delivered in exchange therefor;
(ii) any shares of Company Common Stock then held by
Parent, Merger Sub or any other Subsidiary of Parent shall be canceled and
retired and shall cease to exist at the Effective Time, and no consideration
shall be delivered in exchange therefor;
(iii) each share of the common stock, $0.001 par value
per share, of Merger Sub then outstanding shall be converted into one share
of common stock of the Surviving Corporation;
(iv) except as provided in clauses "(i)" and "(ii)" of
this sentence, each share of Company Common Stock then outstanding shall be
converted into the right to receive (A) one share of Parent Common Stock
multiplied by (B) the Exchange Ratio (as defined in Section 1.5(b)(ii)
(Parent and the Company agree that as of the date of this Agreement (without
taking into account any of the potential adjustments provided in this
Agreement), the Exchange Ratio would be 1.494).
(v) each share of Company Preferred Stock then
outstanding shall be converted into the right to receive (A) one share of
Parent Preferred Stock multiplied by (B) the Exchange Ratio.
(b) For purposes of this Agreement:
(i) The term "Company Outstanding Shares" shall mean,
as of the close of business on the day immediately preceding the date of the
Company Stockholders' Meeting, the sum of (A) the total number of outstanding
shares of Company Common Stock, (B) the total number of shares of Company
Common Stock into which all outstanding Company Preferred Stock is then
convertible in accordance with the Company Certificate of Incorporation, (C)
the total number of shares of Company Common Stock which are issuable upon
exercise of all outstanding Company Options, and (D) the total number of
shares of Company Common Stock issuable upon exercise of all outstanding
Company Warrants.
(ii) The term "Exchange Ratio" shall mean a fraction
equal to (A) the Merger Shares divided by (B) the Company Outstanding Shares.
(iii) The term "Merger Shares" shall mean the total
number of Parent Outstanding Shares multiplied by a fraction, the numerator
of which is 45 and the denominator of which is 55; PROVIDED, HOWEVER, that
(I) in the event the average closing price of Parent's Common Stock as
reported on the American Stock Exchange, Inc. ("AMEX") for the twenty (20)
trading days (whether or not such stock is actually traded on any such day)
ending the day immediately preceding the date of the Parent Shareholders'
Meeting (the "Parent Closing Price") exceeds the closing price per share of
Parent's Common Stock as reported on AMEX on the date this Agreement is
executed (the "Signing Date Closing Price") by more than twenty percent (20%)
of the Signing Date Closing Price, then the total Merger Shares shall equal
$36,921,567 divided by the Parent Closing Price; (II) in the event the Parent
Closing Price is less than the Signing Date Closing Price by an amount equal
to more than twenty-nine percent (29%) of the Signing Date Closing Price,
then the total Merger Shares shall equal $21,839,666 divided by the Parent
Closing Price and (III) the total Merger Shares shall be reduced by 403,549
shares.
(iv) The term "Parent Outstanding Shares" shall mean,
as of the close of business on the day immediately preceding the date of the
Parent Shareholders' Meeting, the sum of (A) the total number of outstanding
shares of Parent Common Stock, (B) the total number of shares of Parent
Common Stock which are issuable upon exercise of all
outstanding Parent Options, and (C) the total number of shares of Parent
Common Stock issuable upon exercise of all Outstanding Parent Warrants.
(c) If any shares of Company Common Stock outstanding
immediately prior to the Effective Time are subject to vesting conditions, a
repurchase option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with the Company or
under which the Company has any rights (as in effect immediately prior to the
Effective Time), then the shares of Parent Common Stock issued in exchange
for such shares of Company Common Stock will be subject to the same vesting
conditions, repurchase option, risk of forfeiture or other terms and
conditions in accordance with such applicable restricted stock purchase
agreement or other agreement with the Company, and the certificates
representing such shares of Parent Common Stock shall accordingly be marked
with appropriate legends. The Company shall take all action that may be
necessary to ensure that, from and after the Effective Time, Parent is
entitled to exercise any such repurchase option or other right set forth in
any such restricted stock purchase agreement or other agreement.
(d) No fractional shares of Parent Common Stock or Parent
Preferred Stock shall be issued in connection with the Merger, and no
certificates or scrip for any such fractional shares shall be issued. Any
holder of Company Common Stock or Company Preferred Stock who would otherwise
be entitled to receive a fraction of a share of Parent Common Stock or Parent
Preferred Stock (after aggregating all fractional shares of Parent Common
Stock or Parent Preferred Stock issuable to such holder, as applicable)
shall, in lieu of such fraction of a share and upon surrender of such
holder's Company Stock Certificate(s) (as defined in Section 1.8), be paid in
cash the dollar amount (rounded to the nearest whole cent), without interest,
determined by multiplying such fraction by the Parent Closing Price.
(e) All rights with respect to Company Common Stock under
Company Options outstanding immediately prior to the Effective Time, if any,
shall be converted into and become rights with respect to Parent Common
Stock, and Parent shall assume each Company Option in accordance with the
terms (as in effect immediately prior to the Effective Time) of the Company's
1993 Stock Plan, 1997 Equity Incentive Plan, 1998 Non-Officer Equity
Incentive Plan and 1997 Non-Employee Directors' Stock Option Plan and the
stock option agreements by which such options are evidenced, other than
provisions contained in such plans and agreements which grant the plan
administrator discretion with respect to the terms and provisions of such
plans and agreements. From and after the Effective Time, (i) each Company
Option assumed by Parent may be exercised solely for shares of Parent Common
Stock, (ii) the number of shares of Parent Common Stock subject to each
Company option shall be equal to the number of shares of Company Common Stock
subject to such Company Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounding to the nearest whole share, (iii)
the per share exercise price under each such Company Option shall be adjusted
by dividing the per share exercise price under each such Company Option by
the Exchange Ratio and rounding to the nearest cent and (iv) the term,
exercisability, vesting schedule and other provisions of such Company Option
shall otherwise remain unchanged.
1.6 COMPANY WARRANTS. At the Effective Time, Parent shall assume
each Company Warrant in accordance with the terms (as in effect as of the
date hereof) of such Company Warrant (except to the extent that a holder of a
Company Warrant has elected to
require the Company to repurchase such Common Warrant in accordance with its
terms). From and after the Effective Time, (i) each Company Warrant assumed
by Parent may be exercised solely for shares of Parent Common Stock, (ii) the
number of shares of Parent Common Stock subject to each Company Warrant shall
be equal to the number of shares of Company Common Stock subject to such
Company Warrant immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounding to the nearest whole share, (iii) the per share
exercise price under each such Company Warrant shall be equal to the per
share exercise price under such Company Warrant divided by the Exchange
Ratio, rounding to the nearest cent and (iv) any restriction on the exercise
of any Company Warrant shall continue in full force and effect and the term,
exercisability and other provisions of such Company Warrant shall otherwise
remain unchanged. The Company shall take all action that may be necessary
(under the Company Warrants and otherwise) to effectuate the provisions of
this Section 1.6 and to ensure that, from and after the Effective Time,
holders of Company Warrants have no rights with respect thereto other than
those specifically provided herein.
1.7 EMPLOYEE STOCK PURCHASE PLAN. As of the Effective Time, the
Company's 1997 Employee Stock Purchase Plan ("ESPP") shall be terminated.
The rights of participants in the ESPP with respect to any offering period
then underway under the ESPP shall be determined by treating the last
business day prior to the Effective Time as the last day of such offering
period and by making such other pro-rata adjustments as may be necessary to
reflect the reduced offering period but otherwise treating such offering
period as a fully effective and completed offering period for all purposes of
such Plan. Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the ESPP) that are
necessary to give effect to the transactions contemplated by this Section 1.7.
1.8 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective
Time: (a) all shares of Company Common Stock and Company Preferred 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 Company Common Stock and Company
Preferred 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 Company Common Stock and Company Preferred Stock outstanding
immediately prior to the Effective Time. No further transfer of any such
shares of Company Common Stock or Company Preferred Stock shall be made on
such stock transfer books after the Effective Time. If, after the Effective
Time, a valid certificate previously representing any shares of Company
Common Stock or Company Preferred Stock (a "Company Stock Certificate") is
presented to the Exchange Agent (as defined in Section 1.9) or to the
Surviving Corporation or Parent, such Company Stock Certificate shall be
canceled and shall be exchanged as provided in Section 1.9.
1.9 EXCHANGE OF CERTIFICATES.
(a) American Securities Transfer & Trust, Inc. or such other
reputable bank or trust company selected by Parent (and reasonably acceptable
to the Company) prior to the Closing Date shall act as exchange agent in the
Merger (the "Exchange Agent"). Promptly after the Effective Time, Parent
shall deposit with the Exchange Agent (i) certificates representing the
shares of Parent Common Stock issuable pursuant to this Section 1, (ii) the
certificates representing the shares of Parent Preferred Stock issuable
pursuant to this Section 1, and (iii) cash sufficient to make payments in
lieu of fractional shares in accordance with Section 1.5(d). The shares of
Parent Common Stock and cash amounts so deposited with the Exchange Agent,
together with any dividends or distributions received by the Exchange Agent
with respect to such shares, are referred to collectively as the "Exchange
Fund."
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent will mail to the record holders of Company Stock
Certificates (i) a letter of transmittal in customary form and containing
such provisions as Parent may reasonably specify (including a provision
confirming that delivery of Company Stock Certificates shall be effected, and
risk of loss and title to Company Stock Certificates shall pass, only upon
delivery of such Company Stock Certificates to the Exchange Agent), and (ii)
instructions for use in effecting the surrender of Company Stock Certificates
in exchange for certificates representing Parent Common Stock or Parent
Preferred Stock (as the case may be). Upon surrender of a Company Stock
Certificate to the Exchange Agent for exchange, together with a duly executed
letter of transmittal and such other documents as may be reasonably required
by the Exchange Agent or Parent, (1) the holder of such Company Stock
Certificate shall be entitled to receive in exchange therefor a certificate
representing the number of whole shares of Parent Common Stock or Parent
Preferred Stock that such holder has the right to receive pursuant to the
provisions of Section 1.5 (and cash in lieu of any fractional share of Parent
Common Stock or Parent Preferred Stock), and (2) the Company Stock
Certificate so surrendered shall be canceled. Until surrendered as
contemplated by this Section 1.9(b), each Company Stock Certificate shall be
deemed, from and after the Effective Time, to represent only the right to
receive shares of Parent Common Stock (and cash in lieu of any fractional
share of Parent Common Stock) or Parent Preferred Stock (and cash in lieu of
any fractional share of Parent Preferred Stock), as the case may be, as
contemplated by Section 1. If any Company Stock Certificate shall have been
lost, stolen or destroyed, Parent may, in its discretion and as a condition
precedent to the issuance of any certificate representing Parent Common Stock
or Parent Preferred Stock, require the owner of such lot, stolen or destroyed
Company Stock Certificate to provide an appropriate affidavit and to deliver
a bond (in such sum as Parent may reasonably direct) as indemnity against any
claim that may be made against the Exchange Agent, Parent or the Surviving
Corporation with respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made with
respect to Parent Common Stock or Parent Preferred Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Company Stock Certificate with respect to the shares of Parent Common Stock
or Parent Preferred Stock which such holder has the right to receive upon
surrender thereof until such holder surrenders such Company Stock Certificate
in accordance with this Section 1.9 (at which time such holder shall be
entitled, subject to the effect of applicable escheat or similar laws, to
receive all such dividends and distributions, without interest).
(d) Any portion of the Exchange Fund that remains
undistributed to holders of Company Stock Certificates as of the date one
year after the date on which the Merger becomes effective shall be delivered
to Parent upon demand, and any holders of Company Stock Certificates who have
not theretofore surrendered their Company Stock Certificates in accordance
with this Section 1.9 shall thereafter look only to Parent for satisfaction
of their
claims for Parent Common Stock or Parent Preferred Stock, cash in lieu of
fractional shares of Parent Common or Parent Preferred Stock and any
dividends or distributions with respect to Parent Common Stock or Parent
Preferred Stock.
(e) Each of the Exchange Agent, Parent and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock or Company Preferred Stock such amounts
as may be required to be deducted or withheld therefrom under the Code or any
provision of state, local or foreign tax law or under any other applicable
Legal Requirement. To the extent such amounts are so deducted or withheld,
such amounts shall be treated for all purposes under this Agreement as having
been paid to the Person to whom such amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be
liable to any holder or former holder of Company Common Stock or Company
Preferred Stock or to any other Person with respect to any shares of Parent
Common Stock or Parent Preferred Stock (or dividends or distributions with
respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property law, escheat law or similar
Legal Requirement.
1.10 TAX CONSEQUENCES. For federal income tax purposes, the Merger
is intended to constitute a reorganization within the meaning of Section 368
of the Code. The parties to this Agreement hereby adopt this Agreement as a
"plan of reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.
1.11 ACCOUNTING CONSEQUENCES. For financial reporting purposes,
the Merger is intended to be accounted for as a "purchase."
1.12 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title and possession of and to all rights and property of Merger
Sub and the Company, the officers and directors of the Surviving Corporation
and Parent shall be fully authorized (in the name of Merger Sub, in the name
of the Company and otherwise) to take such action.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub, except as
set forth in the Company Disclosure Schedule, as follows:
2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) The Company and each of its Subsidiaries ("Company
Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The
Company and each Company Subsidiary has all necessary power and authority to:
(i) conduct its business in the manner in which its business is currently
being conducted; (ii) own and use its assets in the manner in which its
assets are currently owned and used; and (iii) perform its obligations under
all Contracts by which it is
bound. There are no Company Subsidiaries other than RiboGene AG. The Company
does not own or hold directly or indirectly, any debt or equity securities
of, or have any other interest in any Entity other than RiboGene AG and the
Company has not entered into any contract or otherwise become obligated to
acquire any such interest.
(b) The Company does not own directly or indirectly, through
any Company Subsidiary or otherwise, any Parent Stock.
(c) The Company and each Company Subsidiary is qualified to
do business as a foreign corporation, and is in good standing, under the laws
of all jurisdictions where the nature of its business requires such
qualification and where the failure to be so qualified would reasonably be
expected to have a Material Adverse Effect on the Company.
(d) The Company owns all of the outstanding equity interests
in RiboGene AG, a German company, which has been funded by the Company as set
forth on Schedule 2.1(d). RiboGene AG has not begun any business operations.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Complete and
accurate copies of the Company's Certificate of Incorporation, including any
Certificate of Designation, and Bylaws (or comparable charter documents),
each as amended to date, of the Company are filed as exhibits to the Company
SEC Documents. The Company has delivered to Parent accurate and complete
copies of the certificate of incorporation, bylaws and other charter and
organizational documents of the Company and each Company Subsidiary,
including all amendments thereto.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of:
(i) 30,000,000 shares of Company Common Stock, $.001 par value per share, of
which 5,788,642 shares have been issued and are outstanding as of the date of
this Agreement; and (ii) 5,000,000 shares of Preferred Stock, $.001 par value
per share, of which 1,428,572 shares have been issued and are outstanding.
All of the outstanding shares of Company Common Stock and Company Preferred
Stock have been duly authorized and validly issued, and are fully paid and
nonassessable. Except as set forth in Schedule 2.3(a) of the Company
Disclosure Schedule: (i) none of the outstanding shares of Company Common
Stock or Company Preferred Stock is entitled or subject to any preemptive
right, right of participation, right of maintenance or any similar right;
(ii) none of the outstanding shares of Company Common Stock or Company
Preferred Stock is subject to any right of first refusal in favor of the
Company; and (iii) there is no Contract relating to the voting or
registration of, or restricting any Person from purchasing, selling, pledging
or otherwise disposing of (or granting any option or similar right with
respect to), any shares of Company Common Stock or Company Preferred Stock.
The Company is not under any obligation or bound by any Contract pursuant to
which it may become obligated to repurchase, redeem or otherwise acquire any
outstanding shares of Company Common Stock or Company Preferred Stock. The
Company is the sole owner of each outstanding share of capital stock and/or
other equity interests in each Company Subsidiary. The exercise prices of
all of the Company Warrants exceed the Signing Date Closing Price.
(b) As of the date of this Agreement: 1,191,489 shares of
Company Common Stock are subject to issuance pursuant to outstanding options
to purchase shares of Company Common Stock. (Stock options granted by the
Company pursuant to the Company's stock option plans and otherwise are
referred to in this Agreement as "Company Options."). The Company has made
available to Parent (A) accurate and complete copies of all stock option
plans pursuant to which the Company has ever granted stock options, and the
forms of all stock option agreements evidencing such options and (B) a list
detailing (i) each Company Option outstanding as of the date of this
Agreement; (ii) the particular plan (if any) pursuant to which such Company
Option was granted; (iii) the name of the optionee; (iv) the number of shares
of Company Common Stock subject to such Company Option; (v) the exercise
price of such Company Option; (vi) the date on which such Company Option was
granted; (vii) the applicable vesting schedules, and the extent to which such
Company Option is vested and exercisable as of the date of this Agreement;
and (vii) the date on which such Company Option expires. As of the date of
this Agreement, 585,818 shares of Company Common Stock are reserved for
future issuance pursuant to the Company's 1997 Employee Stock Purchase Plan
(the "ESPP").
(c) Except as set forth in Schedule 2.3(c) of the Company
Disclosure Schedule, there is no: (i) outstanding subscription, option (other
than Company Options described under Section 2.3(b)), call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of the Company or any Company Subsidiary; (ii)
outstanding security, instrument or obligation that is or may become
convertible into or exchangeable for any shares of the capital stock or other
securities of the Company or any Company Subsidiary; (iii) stockholder rights
plan (or similar plan commonly referred to as a "poison pill") or Contract
under which the Company or any Company Subsidiary is or may become obligated
to sell or otherwise issue any shares of its capital stock or any other
securities; or (iv) to the best of the knowledge of the Company, condition or
circumstance that may give rise to or provide a basis for the assertion of a
claim by any Person to the effect that such Person is entitled to acquire or
receive any shares of capital stock or other securities of the Company or any
Company Subsidiary.
(d) All outstanding shares of Company Common Stock and all
outstanding shares of Company Preferred Stock have been issued and granted in
compliance with (i) all applicable securities laws and other applicable Legal
Requirements, and (ii) all requirements set forth in applicable Contracts.
2.4 SEC FILINGS; FINANCIAL STATEMENTS; ACCOUNTING CONTROLS.
(a) The Company has delivered or made available (including
through the SEC XXXXX system) to Parent accurate and complete copies of all
registration statements, proxy statements and other statements, reports,
schedules, forms and other documents filed by the Company with the SEC or
AMEX since December 31, 1996, and all amendments thereto (the "Company SEC
Documents"). All statements, reports, schedules, forms and other documents
required to have been filed by the Company with the SEC or AMEX have been so
filed and were prepared and timely filed and complied in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act and all other applicable laws and regulations. As of the time it was
filed with the SEC (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing): (i) each of the
Company SEC Documents complied
in all material respects with the applicable requirements of the Securities
Act or the Exchange Act (as the case may be); and (ii) none of the Company
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(b) The financial statements (including any related notes)
contained in the Company SEC Documents: (i) complied as to form in all
material respects with the published rules and regulations of the SEC
applicable thereto; (ii) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC, and except that the unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end adjustments which
will not, individually or in the aggregate, be material in amount), and (iii)
fairly present the consolidated financial position of the Company as of the
respective dates thereof and the consolidated results of operations and cash
flows of the Company and its subsidiaries for the periods covered thereby.
(c) The Company has delivered to Parent an unaudited
consolidated balance sheet of the Company and its subsidiaries as of June 30,
1999 (the "Company Unaudited Interim Balance Sheet"), and the related
unaudited consolidated statement of operations, statement of stockholders'
equity and statement of cash flows of the Company and its subsidiaries for
the six (6) months then ended. The financial statements referred to in this
Section 2.4(c): (i) were prepared in accordance with generally accepted
accounting principles applied on a basis consistent with the basis on which
the financial statements referred to in Section 2.4(b) were prepared (except
that such financial statements do not contain footnotes and are subject to
normal and recurring year-end adjustments which will not, individually or in
the aggregate, be material in amount), and (ii) fairly present the
consolidated financial position of the Company and its subsidiaries as of
June 30, 1999 and the consolidated results of operations and cash flows of
the Company and its subsidiaries for the periods covered thereby.
(d) The Company and each Company Subsidiary maintains a
system of accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1999,
there has not been (a) any change, or any development or combination of
changes or developments that has had or would reasonably be expected to have
a Material Adverse Effect on the Company, (b) any damage, destruction or loss
of any of the assets of the Company, whether or not covered by insurance,
that has had or would reasonably be expected to have a Material Adverse
Effect on the Company, or (c) any transaction, commitment, dispute or other
event or condition (financial or otherwise) of any character (whether or not
in the ordinary course of business) which would
be prohibited by Section 4.2 if it were to occur or be effected between the
date of this Agreement and the Effective Time.
2.6 TITLE TO ASSETS. The Company owns, and has good, valid and
marketable title to, or, in the case of leased assets, valid leasehold
interests in, all assets reflected on the Company Unaudited Interim Balance
Sheet. All of said assets are owned or leased by the Company free and clear
of any material Encumbrances, except for (1) any lien for current taxes not
yet due and payable, (2) minor liens that have arisen in the ordinary course
of business and that do not (in any case or in the aggregate) materially
detract from the value of the assets subject thereto or materially impair the
operations of the Company, and (3) liens described in Schedule 2.6 of the
Company Disclosure Schedule.
2.7 PROPRIETARY ASSETS.
(a) The Company owns, licenses or otherwise possess legally
enforceable rights to use and exploit all Proprietary Assets that are owned
by or licensed to the Company or any Company Subsidiary or used in or
necessary for the operation of the Company's or any Company Subsidiary's
respective businesses as currently conducted (the "Company Proprietary
Assets"), except to the extent that the failure to have such rights has not
had, and would not reasonably be expected to have, a Material Adverse Effect
on the Company.
(b) The Company has delivered to Parent a list of all patents
and patent applications and all registered and unregistered trademarks, trade
names, service marks and copyrights, and all applications with respect
therefor, included in the Company Proprietary Assets, including the
jurisdictions in which each such Company Proprietary Asset has been issued or
registered or in which any application for such issuance and registration has
been filed, and has made available to Parent all licenses, sublicenses and
other agreements to which the Company is a party and pursuant to which any
Person is authorized to use any Company Proprietary Asset, and all licenses,
sublicenses and other agreements to which the Company is a party and pursuant
to which it is authorized to use any Proprietary Asset held or used by a
third party (other than "shrink wrap" licenses with respect to commercially
available software programs costing less than $10,000) ("Third Party
Proprietary Assets").
(c) To the Company's knowledge, there is no unauthorized use,
disclosure, infringement or misappropriation of any Company Proprietary
Asset, or any Third Party Proprietary Asset to the extent licensed by or
through the Company by any third party, including any employee or former
employee of the Company, except such as would not have a Material Adverse
Effect on the Company. Neither the Company nor any Company Subsidiary has
entered into any agreement to indemnify any other Person against any charge
of infringement of any Company Proprietary Asset.
(d) Neither the Company nor any Company Subsidiary is, or
will as a result of the execution and delivery of this Agreement or the
performance of its obligations under this Agreement be, in breach of any
license, sublicense or other agreement relating to any Company Proprietary
Asset or Third Party Proprietary Asset, except for such breaches that would
not have a Material Adverse Effect on the Company.
(e) All patents, registered trademarks, registered service
marks or copyright registrations owned by the Company or any Company
Subsidiary are valid and subsisting. Except for actions which would not
reasonably be expected to have a Material Adverse Effect on the Company,
neither the Company nor any Company Subsidiary (i) is a party to any Legal
Proceeding which involves a claim of infringement of any Third Party
Proprietary Asset or (ii) has brought any Legal Proceeding for infringement
of any Company Proprietary Asset or breach of any license or agreement
involving a Company Proprietary Asset against any third party, which action
is continuing. To the Company's knowledge, the manufacture, marketing,
licensing or sale of any Company Proprietary Asset or products does not
infringe any Third Party Proprietary Asset.
(f) The Company has secured agreements with all consultants
and employees who prior to the date of this Agreement contributed to the
creation or development of any Company Proprietary Asset regarding the rights
to such contributions that the Company does not already own by operation of
law in the form substantially identical to the form of Proprietary
Information and Inventions Agreement previously made available to Parent.
(g) The Company has taken all reasonable and appropriate
steps to protect and preserve the confidentiality of all Company Proprietary
Assets not otherwise protected by patents, patent applications or copyrights
("Confidential Information"). All use, disclosure or appropriation of
Confidential Information owned by the Company by or to any third party has
been pursuant to the terms of a written agreement between the Company and
such third party, and all use, disclosure or appropriation of Confidential
Information not owned by the Company has been pursuant to the terms of a
written agreement between the Company and the owner of such Confidential
Information, or is otherwise lawful.
2.8 CONTRACTS.
(a) Except as identified as an exhibit to a Company SEC
Document, neither the Company nor any Company Subsidiary is a party to, or
bound by, any Material Company Contract. For purposes of this Agreement, a
"Material Company Contract" shall be deemed to be any Contract filed or
required to be filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1998 or as an exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, and any
Contract:
(i) relating to the employment or engagement of, or
the performance of services by, any employee, consultant or independent
contractor in excess of $100,000 per year;
(ii) restricting in any manner the Company's or any
Company Subsidiary's right or ability to (A) compete with any other Person,
(B) acquire or transfer any product, technology or other asset from or to any
other Person, or (C) develop or distribute any Company Proprietary Asset;
(iii) that (A) provides for the receipt or expenditure
by the Company or any Company Subsidiary of cash or other consideration in
excess of $100,000; (B) relates to the performance of services by or on
behalf of the Company or any Company
Subsidiary having a value in excess of $100,000; (C) was entered into outside
the ordinary course of business; or (D) is material and cannot be terminated
by the Company without penalty with 30 days notice or less;
(iv) relating to the acquisition, issuance or transfer
of any securities;
(v) creating or relating to the creation of any
Encumbrance with respect to any of the Company Proprietary Assets or other
assets having a value in excess of $100,000;
(vi) involving or incorporating any guaranty, pledge,
performance, completion bond, indemnity or contribution or surety
arrangement; or
(vii) creating or relating to any partnership, joint
venture, research or development collaboration, license agreement, or any
other Contract by which the Company or any Company Subsidiary is obligated or
has the right to share any revenues, profits, losses, costs or Liabilities.
(b) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Company, all Material Company Contracts
are in full force and effect and are enforceable against the Company and, to
the Company's knowledge, are enforceable against the other parties thereto,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, as limited by laws relating to
the availability of specific performance, injunctive relief, or by general
equitable principles, and to the extent any indemnification or contribution
provisions thereof may be limited by applicable federal or state securities
laws. Neither the Company nor any Company Subsidiary has breached, or
received in writing any claim or threat that it has breached, in any material
respect, and no default has occurred under, any of the Material Company
Contracts and, to the Company's knowledge, (i) none of the other contracting
parties has violated or breached, and no default has occurred under any of
the Material Company Contracts, and (ii) other than the transactions
contemplated hereby, no event has occurred, and no circumstance or condition
exists which with the giving of notice or the lapse of time, or both, will,
or could reasonably be expected to, result in a violation, breach or default
under any Material Company Contract or give any Person the right to cancel,
terminate or modify any Material Company Contract. To the Company's
knowledge, no party to a Material Company Contract currently in effect has
given notice to the Company or any Company Subsidiary of intent to terminate
such Material Company Contract in a way that would have a Material Adverse
Effect on the Company. The Company has provided Parent or Parent's counsel
with access to true and complete copies of each of the Material Company
Contracts. Consummation of the transactions contemplated by this Agreement
and each other agreement to be entered into by the Company in connection
herewith will not (and will not give any Person a right to) cancel, terminate
or modify any material rights of, or accelerate or increase any material
obligation of, the Company under any Material Company Contract.
(c) The Company and each Company Subsidiary possess all
material Governmental Authorizations which are required in order to operate
their respective businesses as presently conducted, and the Company and each
Company Subsidiary is in compliance in all material respects with all such
Governmental Authorizations. Each such Governmental Authorization is
identified in Schedule 2.8(c) of the Company Disclosure Schedule. Each such
Governmental Authorization is valid and in full force and effect and will
remain so until consummation of the transactions contemplated by this
Agreement, except where the failure to comply would not have a Material
Adverse Effect on the Company.
(d) Except as set forth in Schedule 2.8(d) of the Company
Disclosure Schedule, there are no claims made or, to the Company's knowledge,
threatened against the Company or any Company Subsidiary under each Material
Company Contract presently or heretofore in effect to the extent such claims,
individually or in the aggregate, have had or would reasonably be expected to
have a Material Adverse Effect on the Company.
2.9 PERMITS; COMPLIANCE WITH LEGAL REQUIREMENTS. The Company and
each Company Subsidiary holds all permits, licenses, vacancies, order and
appeals which are material to the operation of the Company and the Company
Subsidiaries. The Company and each Company Subsidiary is, and has at all
times since January 1, 1997 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and would not reasonably be expected to have a Material Adverse
Effect on the Company. Since January 1, 1997, neither the Company nor any
Company Subsidiary has received any notice or other communication from any
Governmental Body or other Person regarding any actual or possible violation
of, or failure to comply with, any Legal Requirement.
2.10 CERTAIN BUSINESS PRACTICES. Neither the Company nor any
Company Subsidiary nor (to the best of the knowledge of the Company) any
director, officer, agent or employee of the Company or any Company Subsidiary
has (i) used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns or violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii)
made any other unlawful payment.
2.11 TAX MATTERS.
(a) Each Tax Return required to be filed by or on behalf of
the Company and each Company Subsidiary with any Governmental Body with
respect to any taxable period ending on or before the Closing Date (the
"Company Returns") (i) has been or will be filed on or before the applicable
due date, and (ii) has been, or will be when filed, prepared in all material
respects in compliance with all applicable Legal Requirements. All amounts
shown on the Company Returns to be due on or before the Closing Date have
been or will be paid on or before the Closing Date.
(b) The Company Unaudited Interim Balance Sheet fully accrues
all actual and contingent liabilities for Taxes with respect to all periods
through December 31, 1998 in accordance with generally accepted accounting
principles. The Company will establish, in the
ordinary course of business and consistent with its past practices, reserves
adequate for the payment of all Taxes for the period from December 31, 1998
through the Closing Date, and will disclose the amount of such reserves to
Parent no later than 10 business days prior to the Closing Date. Since
December 31, 1998, the Company has not incurred any Liability for any Tax
other than in the ordinary course of its business.
(c) No Company Return has ever been examined or audited by
any Governmental Body. No extension or waiver of the limitation period
applicable to any of the Company Returns has been granted (by the Company or
any other Person), and no such extension or waiver has been requested from
the Company.
(d) No claim or Legal Proceeding is pending or, to the best
of the knowledge of the Company, has been threatened against or with respect
to the Company in respect of any material Tax. There are no unsatisfied
liabilities for material Taxes (including liabilities for interest, additions
to tax and penalties thereon and related expenses) with respect to any notice
of deficiency or similar document received by the Company with respect to any
material Tax (other than liabilities for Taxes asserted under any such notice
of deficiency or similar document which are being contested in good faith by
the Company and with respect to which adequate reserves for payment have been
established on the Company Unaudited Interim Balance Sheet). There are no
liens for material Taxes upon any of the assets of the Company except liens
for current Taxes not yet due and payable. The Company has not entered into
or become bound by any agreement or consent pursuant to Section 341(f) of the
Code (or any comparable provision of state or foreign Tax laws). The Company
has not been and it will not be required to include any adjustment in taxable
income for any tax period (or portion thereof) pursuant to Section 481 or
263A of the Code (or any comparable provision under state or foreign Tax
laws) as a result of transactions or events occurring, or accounting methods
employed, prior to the Closing.
(e) There is no agreement, plan, arrangement or other
Contract covering any employee or independent contractor or former employee
or independent contractor of the Company that, considered individually or
considered collectively with any other such Contracts, will, or could
reasonably be expected to, give rise directly or indirectly to the payment of
any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code (or any comparable provision under state or foreign Tax
laws). The Company is not, nor has it ever been, a party to or bound by any
tax indemnity agreement, tax sharing agreement, tax allocation agreement or
similar Contract.
2.12 EMPLOYEE BENEFIT PLANS.
(a) Schedule 2.12(a) of the Company Disclosure Schedule
identifies each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay, medical, life,
disability or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program or agreement sponsored,
maintained, contributed to or required to be contributed to by the Company
and/or each Company Subsidiary for the benefit of any current or former
employee, consultant, officer or director of the Company or any Company
Subsidiary (other than those plans, programs and agreements disclosed in the
Company SEC Documents).
(b) Except as set forth in Schedule 2.12(b) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary
maintains, sponsors or contributes to, nor has at any time in the past
maintained, sponsored or contributed to, any employee pension benefit plan
(as defined in Section 3(2) of ERISA, whether or not excluded from coverage
under specific Titles or Subtitles of ERISA) for the benefit of employees or
former employees of the Company or any Company Subsidiary. Except as set
forth in Schedule 2.12(b) of the Company Disclosure Schedule, neither the
Company nor any Company Subsidiary maintains, sponsors or contributes to, nor
has at any time in the past maintained, sponsored or contributed to, nor has
any obligation or liability (whether accrued, contingent or otherwise) with
respect to, any employee benefit plan (as defined in Section 3(3) of ERISA)
or any other plan, policy, program, arrangement or agreement that is: (i)
subject to Section 302 or Title IV of ERISA or Section 412 of the Code, (ii)
a multi employer plan (as defined in Section 3(37) or 4001(a)(3) of ERISA),
or (iii) provides welfare benefits to employees or former employees (or their
dependents) of the Company or any Company Subsidiary following retirement or
other termination of employment (except as required by Section 4980B of the
Code or Title I, Subtitle B, Part 6 of ERISA).
(c) Each of the plans identified in Schedule 2.12(a) of the
Company Disclosure Schedule intended to be qualified under Section 401(a) of
the Code has received a favorable determination from the Internal Revenue
Service, and the Company is not aware of any reason why any such
determination letter should be revoked. Each of the plans, programs and
agreements identified in Schedule 2.12(a) of the Company Disclosure Schedule
has been maintained in compliance in all material respects with its terms
and, both as to form and in operation, with the requirements prescribed by
any and all applicable statutes, orders, rules and regulations, including
without limitation, ERISA and the Code. The Company has delivered to Parent,
with respect to each plan, program or agreement identified in Schedule
2.12(a) of the Company Disclosure Schedule, a copy of: (i) the document under
which such plan, program or agreement is maintained and all amendments
thereto (and all related funding instruments), (ii) the most recent
determination letter issued by the Internal Revenue Service (if applicable)
and (iii) the most recent Form 5500 filed with the Internal Revenue Service
with respect to such plan, program or agreement (if applicable).
(d) Except as disclosed in Schedule 2.12(d) of the Company
Disclosure Schedule or in the Company SEC Documents, neither the execution,
delivery or performance of this Agreement, nor the consummation of the Merger
or any of the other transactions contemplated by this Agreement, will result
in any payment (including any bonus, golden parachute or severance payment)
to any current or former employee or director of the Company (whether or not
under any plan), or materially increase the benefits payable under any plan,
or result in any acceleration of the time of payment or vesting of any such
benefits.
(e) The Company and each Company Subsidiary is in compliance
with all applicable Legal Requirements and Contracts relating to employment,
employment practices, wages, bonuses and terms and conditions of employment,
including employee compensation matters, except where the failure to be in
compliance would not have a Material Adverse Effect on the Company.
2.13 INSURANCE. The Company has made available to Parent a copy of
all material insurance policies and all material self insurance programs and
arrangements relating to
the business, assets and operations of the Company and each Company
Subsidiary. Each of such insurance policies is in full force and effect.
Since January 1, 1997, the Company has not received any notice or other
communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or
rejection of any material claim under any insurance policy, or (c) material
adjustment in the amount of the premiums payable with respect to any
insurance policy. Except as set forth in Schedule 2.13 of the Company
Disclosure Schedule, there is no pending workers' compensation or other claim
under or based upon any insurance policy of the Company or any Company
Subsidiary.
2.14 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Company SEC Documents or as contemplated by this Agreement, since the date of
the Company's last proxy statement filed with the SEC, no event has occurred
that would be required to be reported by the Company pursuant to Item 404 of
Regulation S-K promulgated by the SEC. Schedule 2.14 of the Company
Disclosure Schedule identifies each person who is (or who may be deemed to
be) an "affiliate" (as that term is used in Rule 145 under the Securities
Act) of the Company as of the date of this Agreement.
2.15 LITIGATION. There is no Legal Proceeding pending or, to the
Company's knowledge, threatened by or before any court or Governmental
Authority that involves the Company or any Company Subsidiary or any of the
assets owned or used by the Company or any Company Subsidiary. Neither the
Company nor any Company Subsidiary is a party to any decree, order, writ,
injunction, judgment or arbitration award (or agreement entered into in any
Legal Proceeding) with respect to its properties, assets, personnel or
business activities.
2.16 PROPERTIES. Schedule 2.16 of the Company Disclosure Schedule
sets forth each lease of real and personal property to which the Company and
each Company Subsidiary is a party (the "Company Leases"). The Company has
previously made available to Parent complete and accurate copies of all the
Company Leases. Each of the Company Leases is valid, binding and enforceable
in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, as limited
by laws relating to the availability of specific performance, injunctive
relief, or by general equitable principles, and to the extent any
indemnification or contribution provisions thereof may be limited by
applicable federal or state securities laws. Neither the Company nor any
Company Subsidiary has breached, nor received in writing any claim or threat
that it has breached, in any material respect, and no default has occurred
under any of the Company Leases and, to the Company's knowledge, (i) none of
the other contracting parties has violated or breached, and no default has
occurred under any of the Company Leases, and (ii) other than the
transactions contemplated hereby, no event has occurred, and no circumstance
or condition exists which with the giving of notice or the lapse of time, or
both, will, or could reasonably be expected to, result in a violation, breach
or default under any of the Company Leases or give any Person the right to
cancel, terminate or modify any of the Company Leases. Neither the Company
nor any Company Subsidiary owns any real property.
2.17 ENVIRONMENTAL MATTERS. To the knowledge of the Company, no
current owner of any property leased or controlled by the Company or any
Company Subsidiary has received any notice (in writing or otherwise), whether
from a Governmental Body, citizens
group, employee or otherwise, that alleges that such current or prior owner
or the Company or any Company Subsidiary is not in compliance with any
Environmental Law. The Company has not received any notice or information
that any property that is leased to, controlled by or used by the Company or
any Company Subsidiary, or any surface water, groundwater and soil associated
with or adjacent to such property, is not in clean and healthful condition or
that it is not free of any material environmental contamination. For purposes
of this Section 2.17: (i) "Environmental Law" means any federal, state,
local or foreign Legal Requirement relating to pollution or protection of
human health or the environment (including ambient air, surface water, ground
water, land surface or subsurface strata), including any law or regulation
relating to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern; and (ii) "Materials of
Environmental Concern" include chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other substance
that is now or hereafter regulated by any Environmental Law or that is
otherwise a danger to health, reproduction or the environment.
2.18 COMPANY ACTION. The board of directors of the Company (at a
meeting duly called and held) has (a) unanimously determined that the Merger
is in the best interests of the Company and its stockholders, (b) unanimously
approved this Agreement and the Merger in accordance with the provisions of
Section 251 of the DGCL, (c) unanimously recommended the adoption and
approval of this Agreement and the Merger by the stockholders of the Company
and directed that the Merger be submitted for consideration by the Company's
stockholders at the Company Stockholders' Meeting, (d) taken all necessary
steps to render Section 203 of the DGCL inapplicable to the Merger and the
other transactions contemplated by this Agreement and (e) adopted a
resolution having the effect of causing the Company not to be subject, to the
extent permitted by applicable law, to any state takeover law that may
purport to be applicable to the Merger and the other transactions
contemplated by this Agreement.
2.19 ENFORCEABILITY. The Company has all requisite corporate power
and authority to execute, deliver and, subject to obtaining requisite
stockholder approval, to perform its obligations under this Agreement and all
other agreements, documents and instruments contemplated hereby to which it
is or will become a party. The execution and delivery of this Agreement and
the other agreements, documents and instruments contemplated hereby have been
duly and validly authorized by the board of directors of the Company, and no
other corporate proceedings on the part of the Company are necessary for the
Company to authorize any of such agreements, documents or instruments and no
such corporate proceedings (other than the approval of the Company
Stockholders) are necessary to enable the Company to consummate the Merger or
any of the other transactions contemplated by this Agreement. All
agreements, documents and instruments to be executed in connection with the
Merger (a) have been (or will be) duly executed and delivered by duly
authorized officers of the Company and (b) constitute (or, when executed by
the Company, will constitute) legal, valid and binding obligations of the
Company enforceable against it in accordance with their terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, as limited by laws relating to the availability
of specific performance, injunctive relief, or by general equitable
principles, and to the extent any indemnification or contribution provisions
thereof may be limited by applicable federal or state securities laws.
2.20 GOVERNMENTAL CONSENTS; NO CONFLICTS. Except as may be
required by the Exchange Act, the Securities Act, state securities or blue
sky laws, the DGCL, the NASD bylaws and the rules and regulations of AMEX (as
they relate to the S-4 Registration Statement and the Prospectus/Joint Proxy
Statement) (collectively, the "Applicable Regulatory Requirements"), there is
no requirement applicable to the Company or any Company Subsidiary to make
any filing with, or to obtain any permit, authorization, or Consent of, any
Governmental Authority as a condition to the consummation of the Merger or
any of the other transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement and the other agreements, documents
and instruments contemplated hereby by the Company nor the consummation by
the Company of the Merger or any of the other transactions contemplated by
this Agreement will (a) violate the Certificate of Incorporation or Bylaws of
the Company, (b) result in a default (or with notice or lapse of time or both
would result in a default) under, or materially impair the rights of the
Company or any Company Subsidiary or materially alter the rights or
obligations of any third party under, or require the Company or any Company
Subsidiary to make any material payment or become subject to any material
liability to any third party under, or give rise to any right of termination,
amendment, cancellation, acceleration, repurchase, put or call under, any of
the terms, conditions or provisions of any Material Company Contract, (c)
result in the creation of any material (individually or in the aggregate)
Encumbrance on any of the assets of the Company or any Company Subsidiary or
(d) conflict with or violate any law, statute, rule, regulation, judgment,
order, writ, injunction, decree or arbitration award applicable to the
Company or any Company Subsidiary or any of their assets, which conflict or
violation has had or would reasonably be expected to have a Material Adverse
Effect on the Company.
2.21 YEAR 2000 PREPAREDNESS. There are no issues related to the
Company's or any Company Subsidiary's preparedness for the Year 2000
(including, without limitation, any issues relating to the Company's or
Company Subsidiary's internal computer systems and each Constituent Component
of those systems and all computer related products and each Constituent
Component of such products) that are of a character required to be described
or referred to in the Company SEC Documents by the Securities Act or by the
Exchange Act which have not been accurately described in the Company SEC
Documents. "Constituent Component" means all software (including operating
systems, programs, packages and utilities), firmware, hardware, networking
components, and peripherals provided as part of the configuration. Except as
otherwise disclosed in the Company SEC Documents, the Company has inquired of
material vendors as to their preparedness for the Year 2000 and has disclosed
in the Company Disclosure Schedule or Company SEC Documents any issues that
might reasonably be expected to result in any Material Adverse Effect on the
Company.
2.22 REGULATORY MATTERS.
(a) Except as disclosed on Schedule 2.22(a) of the Company
Disclosure Schedule, the Company has obtained and is in compliance in all
material respects with all certifications, approvals and clearances from the
United States Food and Drug Administration (the "FDA") and all state, local
and foreign equivalents (collectively, the "FDA, etc.") necessary in order to
carry out its business and the businesses of each Company Subsidiary as
currently conducted, including without limitation to develop pharmaceutical
products in any
and all geographic areas in which the Company or any Company Subsidiary is
currently, or has previously, developed pharmaceutical products.
(b) All nonclinical laboratory studies of pharmaceutical
products have been and are being conducted in all material respects in
compliance with all applicable federal, state, local and foreign laws, rules
and regulations (including, without limitation, any reporting requirements
thereof) and with accepted standards of good laboratory practice. All
clinical trials of pharmaceutical products have been and are being conducted
in all material respects in compliance with all applicable federal, state,
local and foreign laws, rules and regulations (including, without limitation,
any reporting requirements thereof) and with accepted standards of good
clinical practice.
(c) Neither the Company nor any Company Subsidiary, nor any
officer, employee or agent of the Company or any Company Subsidiary has made
any untrue statement of a material fact or fraudulent statement to the FDA,
etc. or failed to disclose a material fact required to be disclosed to the
FDA, etc. The Company has provided Parent with copies of any and all notice
of inspectional observations, establishment inspection reports and any other
documents received from the FDA, etc. that indicate or suggest material lack
of compliance with the regulatory requirements of the FDA, etc. The Company
has made available to Parent for review all correspondence to or from the
FDA, etc., minutes of meetings with the FDA, etc., written reports of phone
conversations, visits or other contact with the FDA, etc., notices of
inspectional observations, establishment inspection reports, and all other
documents in its possession concerning communications to or from the FDA,
etc., or prepared by the FDA, etc., which bear in any way on the Company's or
its Subsidiaries' compliance with regulatory requirements of the FDA, etc. or
on the likelihood of timing of approval of any pharmaceutical products.
2.23 CERTAIN COLLABORATION AGREEMENTS. The Company has not
received any notice of nor is the Company aware that, since December 31,
1998, there has been any material adverse change or event with respect to any
of the Company's or any Company Subsidiary's research programs, including
with respect to either of the Company's collaboration arrangements with
Dainippon Pharmaceutical Co., Ltd. ("Dainippon") and/or Xxxxxxx
Pharmaceutical Co. ("Xxxxxxx") (together, the "Collaboration Agreements").
Each of the Collaboration Agreements is in full force and effect and the
Company is not aware that either Dainippon or Xxxxxxx (or Shire
Pharmaceuticals Group Plc as the prospective successor in interest to
Xxxxxxx) intends to terminate its Collaboration Agreement with the Company
within 12 months of the date of this Agreement and relations between the
Company and such parties are good.
2.24 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the shares of Company Common Stock outstanding on the record date
for the Company Stockholders' Meeting (the "Required Company Stockholder
Vote") is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve and consummate this Agreement,
the Merger and the other transactions contemplated by this Agreement.
2.25 FAIRNESS OPINION. The Company's board of directors has
received the written opinion of Rabobank International, financial advisor to
the Company, dated the date of
this Agreement, to the effect that the Exchange Ratio is fair to the
stockholders of the Company from a financial point of view. The Company has
furnished an accurate and complete copy of said written opinion to Parent.
2.26 FINANCIAL ADVISOR. Except for Rabobank International, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company. The Company has furnished to Parent accurate
and complete copies of all agreements under which any such fees, commissions
or other amounts have been paid or may become payable and all indemnification
and other agreements related to the engagement of Rabobank International.
2.27 VOTING AGREEMENTS; PREFERRED STOCK WAIVER. Each member of the
board of directors and each executive officer of the Company has agreed on
behalf of himself and his affiliates to vote in favor of the Merger at the
Company Stockholders' Meeting and has executed and delivered to Parent a
Voting Agreement substantially in the form attached hereto as Exhibit E-1.
The holder of the Company Preferred Stock has, on behalf of itself and its
affiliates, waived its right to receive a distribution pursuant to its
liquidation preference in connection with the transactions contemplated under
this Agreement and has executed and delivered to Parent a Waiver and Voting
Agreement in substantially the form attached hereto as Exhibit E-2.
2.28 DISCLOSURE.
(a) The copies of all documents furnished by the Company
pursuant to the terms of this Agreement are complete and accurate copies of
the original, as such documents may have been amended to date.
(b) None of the representations and warranties of the Company
contained in Section 2 of this Agreement or in any other Section of this
Agreement or the information disclosed in the Company Disclosure Schedule
contains any untrue statement of a material fact or omits 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 are made,
not misleading.
(c) None of the information supplied or to be supplied by the
Company for inclusion or incorporation by reference in the Form S-4
registration statement to be filed with the SEC by Parent in connection with
the issuance of the Merger Shares (the "S-4 Registration Statement") will, at
the time the S-4 Registration Statement is filed with the SEC or at the time
the S-4 Registration Statement becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the
Prospectus/Joint Proxy Statement, will, at the time the Prospectus/Joint
Proxy Statement is mailed to the stockholders of the Company or the
shareholders of Parent, at the time of the Company Stockholders' Meeting or
the Parent Shareholders' Meeting and as of the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, no representation or warranty is
made by the Company with respect to statements made about the Parent or
Merger Sub or based on information supplied by Parent or Merger Sub or any of
their representatives which is contained in the S-4 Registration Statement or
the Prospectus/Joint Proxy Statement. The Prospectus/Joint Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated by the SEC thereunder.
2.29 COMPANY RIGHTS PLAN. The execution, delivery and performance
of this Agreement and the consummation of the Merger will not cause any
change, effect or result under the Company Rights Plan which is adverse to
the interests of Parent. Without limiting the generality of the foregoing,
the Company has taken all necessary actions to (i) render the Company Rights
Plan inapplicable to the Merger and the other transactions contemplated by
this Agreement, including the Company Affiliate Agreements and/or the Voting
Agreements, (ii) ensure that (y) neither Parent nor Merger Sub, nor any of
their affiliates shall be deemed to have become an Acquiring Person or a
Transaction Person (as such terms are defined in the Company Rights Plan)
pursuant to the Company Rights Plan by virtue of the execution of this
Agreement, the Company Affiliate Agreements and/or the Voting Agreements, the
consummation of the Merger or the consummation of the other transactions
contemplated hereby and (z) a Distribution Date, or a Transaction (as such
terms are defined in the Company Rights Plan) or similar event does not occur
by reason of the execution of this Agreement, the Company Affiliate
Agreements and the Voting Agreements, the consummation of the Merger, or the
consummation of the other transactions contemplated hereby and (iii) provide
that the Final Expiration Date (as defined in the Company Rights Plan) shall
be immediately prior to the Effective Time. The Company hereby covenants and
agrees that it will take all necessary action to cause this representation to
remain true.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company, except as
set forth in the Parent Disclosure Schedule, as follows:
3.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) Parent and each of its Subsidiaries ("Parent
Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Parent and
each Parent Subsidiary has all necessary power and authority to: (i) conduct
its business in the manner in which its business is currently being
conducted; (ii) own and use its assets in the manner in which its assets are
currently owned and used; and (iii) perform its obligations under all
Contracts by which it is bound. There are no Parent Subsidiaries other than
Merger Sub. Parent does not own or hold directly or indirectly, any debt or
equity securities of, or have any other interest in any Entity other than
Merger Sub and Parent has not entered into any contract or otherwise become
obligated to acquire any such interest.
(b) Parent does not own directly or indirectly, through any
Parent Subsidiary or otherwise, any Company Stock.
(c) Parent and each Parent Subsidiary is qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such
qualification and where the failure to be so qualified would reasonably be
expected to have a Material Adverse Effect on Parent.
3.2 ARTICLES OF INCORPORATION AND BYLAWS. Complete and accurate
copies of the Parent's Restated Articles of Incorporation, including any
Certificate of Designation, and Bylaws (or comparable charter documents),
each as amended to date, of the Parent are filed as exhibits to the Parent
SEC Documents. Parent has made available to the Company accurate and
complete copies of the certificate of incorporation, bylaws and other charter
and organizational documents of the Parent and each Parent Subsidiary,
including all amendments thereto.
3.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Parent consists of:
(i) 30,000,000 shares of Parent Common Stock of no par value per share, of
which 15,711,877 shares have been issued and are outstanding as of the date
of this Agreement; and (ii) 1,000,000 shares of Preferred Stock, no par value
per share, of which no shares are issued and outstanding. All of the
outstanding shares of Parent Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable. Except as set forth in
Schedule 3.3(a) of the Parent Disclosure Schedule: (i) none of the
outstanding shares of Parent Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right; (ii) none of the outstanding shares of Parent Common Stock is subject
to any right of first refusal in favor of the Parent; and (iii) there is no
Contract relating to the voting or registration of, or restricting any Person
from purchasing, selling, pledging or otherwise disposing of (or granting any
option or similar right with respect to), any shares of Parent Common Stock
or Parent Preferred Stock. Parent is not under any obligation or bound by
any Contract pursuant to which it may become obligated, to repurchase, redeem
or otherwise acquire any outstanding shares of Parent Common Stock. Parent
is the sole owner of each outstanding share of capital stock and/or other
equity interests in each Parent Subsidiary.
(b) As of the date of this Agreement, 2,268,686 shares of
Parent Common Stock are subject to issuance pursuant to outstanding options
to purchase shares of Parent Common Stock. (Stock options granted by Parent
pursuant to Parent's stock option plans and otherwise are referred to in this
Agreement as "Parent Options."). Parent has made available to the Company
(A) accurate and complete copies of all stock option plans pursuant to which
Parent has ever granted stock options, and the forms of all stock option
agreements evidencing such options and (B) a list detailing (i) each Parent
Option outstanding as of the date of this Agreement; (ii) the particular plan
(if any) pursuant to which such Parent Option was granted; (iii) the name of
the optionee; (iv) the number of shares of Parent Common Stock subject to
such Parent Option; (v) the exercise price of such Parent Option; (vi) the
date on which such Parent Option was granted; (vii) the applicable vesting
schedules, and the extent to which such Parent Option is vested and
exercisable as of the date of this Agreement; and (viii) the date on which
such Parent Option expires.
(c) Except as set forth in Schedule 3.3(c) of the Parent
Disclosure Schedule, there is no: (i) outstanding subscription, option (other
than Parent Options described
under Section 3.3(b)), call, warrant or right (whether or not currently
exercisable) to acquire any shares of the capital stock or other securities
of Parent; (ii) outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any shares of the capital stock
or other securities of Parent; (iii) shareholder rights plan (or similar plan
commonly referred to as a "poison pill") or Contract under which Parent is or
may become obligated to sell or otherwise issue any shares of its capital
stock or any other securities; or (iv) to the best of the knowledge of
Parent, condition or circumstance that may give rise to or provide a basis
for the assertion of a claim by any Person to the effect that such Person is
entitled to acquire or receive any shares of capital stock or other
securities of Parent or any Parent Subsidiary.
(d) All outstanding shares of Parent Common Stock have been
issued and granted in compliance with (i) all applicable securities laws and
other applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts.
3.4 SEC FILINGS; FINANCIAL STATEMENTS; ACCOUNTING CONTROLS.
(a) Parent has delivered or made available (including through
the SEC XXXXX system) to the Company accurate and complete copies of all
registration statements, proxy statements and other statements, reports,
schedules, forms and other documents filed by Parent with the SEC, Nasdaq or
AMEX since December 31, 1996, and all amendments thereto (the "Parent SEC
Documents"). All statements, reports, schedules, forms and other documents
required to have been filed by Parent with the SEC, Nasdaq or AMEX have been
so filed and were prepared and timely filed and complied in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act and all other applicable laws and regulations. As of the time it was
filed with the SEC (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing): (i) each of the
Parent SEC Documents complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act (as the case may be);
and (ii) none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) The financial statements (including any related notes)
contained in the Parent SEC Documents: (i) complied as to form in all
material respects with the published rules and regulations of the SEC
applicable thereto; (ii) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC, and except that the unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end adjustments which
will not, individually or in the aggregate, be material in amount), and (iii)
fairly present the consolidated financial position of Parent as of the
respective dates thereof and the consolidated results of operations and cash
flows of Parent and its subsidiaries for the periods covered thereby.
(c) Parent has delivered to the Company an unaudited
consolidated balance sheet of Parent and its subsidiaries as of April 30,
1999 (the "Parent Unaudited Interim Balance Sheet"), and the related
unaudited consolidated statement of operations, statement of
shareholders' equity and statement of cash flows of Parent and its
subsidiaries for the nine (9) months then ended. The financial statements
referred to in this Section 3.4(c): (i) were prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
the basis on which the financial statements referred to in Section 3.4(b)
were prepared (except that such financial statements do not contain footnotes
and are subject to normal and recurring year-end adjustments which will not,
individually or in the aggregate, be material in amount), and (ii) fairly
present the consolidated financial position of Parent and its subsidiaries as
of April 30, 1999 and the consolidated results of operations and cash flows
of Parent and its subsidiaries for the periods covered thereby.
(d) Parent and each Parent Subsidiary maintains a system of
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since April 30, 1999,
there has not been (a) any change, or any development or combination of
changes or developments that has had or would reasonably be expected to have
a Material Adverse Effect on Parent, (b) any damage, destruction or loss of
any of the assets of Parent, whether or not covered by insurance, that has
had or would reasonably be expected to have a Material Adverse Effect on
Parent, or (c) any transaction, commitment, dispute or other event or
condition (financial or otherwise) of any character (whether or not in the
ordinary course of business) which would be prohibited by Section 4.5 if it
were to occur or be effected between the date of this Agreement and the
Effective Time.
3.6 TITLE TO ASSETS. Parent owns, and has good, valid and
marketable title to, or, in the case of leased assets, valid leasehold
interests in, all assets reflected on the Parent Unaudited Interim Balance
Sheet. All of said assets are owned or leased by Parent free and clear of
any material Encumbrances, except for (1) any lien for current taxes not yet
due and payable, (2) minor liens that have arisen in the ordinary course of
business and that do not (in any case or in the aggregate) materially detract
from the value of the assets subject thereto or materially impair the
operations of Parent, and (3) liens described in Schedule 3.6 of the Parent
Disclosure Schedule.
3.7 PROPRIETARY ASSETS.
(a) Parent owns, licenses or otherwise possess legally
enforceable rights to use and exploit all Proprietary Assets that are owned
or licensed to Parent or any Parent Subsidiary or used in or necessary for
the operation of Parent's or any Parent Subsidiary's respective businesses as
currently conducted (the "Parent Proprietary Assets"), except to the extent
that the failure to have such rights has not had, and would not reasonably be
expected to have, a Material Adverse Effect on Parent.
(b) Parent has delivered to the Company a list of all patents
and patent applications and all registered and unregistered trademarks, trade
names, service marks and copyrights, and all applications with respect
therefor, included in the Parent Proprietary Assets, including the
jurisdictions in which each such Parent Proprietary Asset has been issued or
registered or in which any application for such issuance and registration has
been filed, and has made available to the Company all licenses, sublicenses
and other agreements to which Parent is a party and pursuant to which any
Person is authorized to use any Parent Proprietary Asset, and all licenses,
sublicenses and other agreements to which Parent is a party and pursuant to
which it is authorized to use any Third Party Proprietary Assets.
(c) To Parent's knowledge, there is no unauthorized use,
disclosure, infringement or misappropriation of any Parent Proprietary Asset,
or any Third Party Proprietary Asset to the extent licensed by or through
Parent by any third party, including any employee or former employee of
Parent, except such as would not have a Material Adverse Effect on Parent.
Neither Parent nor any Parent Subsidiary has entered into any agreement to
indemnify any other Person against any charge of infringement of any Parent
Proprietary Asset.
(d) Neither Parent nor any Parent Subsidiary is, or will as a
result of the execution and delivery of this Agreement or the performance of
its obligations under this Agreement be, in breach of any license, sublicense
or other agreement relating to any Parent Proprietary Asset or Third Party
Proprietary Asset, except for such breaches that would not have a Material
Adverse Effect on Parent.
(e) All patents, registered trademarks, registered service
marks or copyright registrations owned by Parent or any Parent Subsidiary are
valid and subsisting. Except for actions which would not reasonably be
expected to have a Material Adverse Effect on Parent, neither Parent nor any
Parent Subsidiary (i) is a party to any Legal Proceeding which involves a
claim of infringement of any Third Party Proprietary Asset or (ii) has
brought any Legal Proceeding for infringement of any Parent Proprietary Asset
or breach of any license or agreement involving a Parent Proprietary Asset
against any third party, which action is continuing. To Parent's knowledge,
the manufacture, marketing, licensing or sale of any Parent Proprietary Asset
or products does not infringe any Third Party Proprietary Asset.
(f) Parent has secured agreements with all consultants and
employees who prior to the date of this Agreement contributed to the creation
or development of any Parent Proprietary Asset regarding the rights to such
contributions that Parent does not already own by operation of law in the
form substantially identical to the form of Proprietary Information and
Inventions Agreement previously made available to the Company.
(g) Parent has taken all reasonable and appropriate steps to
protect and preserve the confidentiality of all Parent Proprietary Assets not
otherwise protected by patents, patent applications or copyrights
("Confidential Information"). All use, disclosure or appropriation of
Confidential Information owned by Parent by or to any third party has been
pursuant to the terms of a written agreement between Parent and such third
party, and all use, disclosure or appropriation of Confidential Information
not owned by Parent has been pursuant to the terms of a written agreement
between Parent and the owner of such Confidential Information, or is
otherwise lawful.
3.8 CONTRACTS.
(a) Except as identified as an exhibit to a Parent SEC
Document, neither Parent nor any Parent Subsidiary is a party to, or bound
by, any Material Parent Contract. For purposes of this Agreement, a
"Material Parent Contract" shall be deemed to be any Contract filed or
required to be filed as an exhibit to Parent's Annual Report on Form 10-K for
the year ended July 31, 1998 or as an exhibit to Parent's Quarterly Reports
on Form 10-Q for the quarters ended October 31, 1998, January 31, 1999 and
April 30, 1999, and any Contract:
(i) relating to the employment or engagement of, or
the performance of services by, any employee, consultant or independent
contractor in excess of $100,000 per year;
(ii) restricting in any manner Parent's or any Parent
Subsidiary's right or ability to (A) compete with any other Person, (B)
acquire or transfer any product, technology or other asset from or to any
other Person, or (C) develop or distribute any Parent Proprietary Asset;
(iii) that (A) provides for the receipt or expenditure
by Parent or any Parent Subsidiary of cash or other consideration in excess
of $100,000; (B) relates to the performance of services by or on behalf of
Parent or any Parent Subsidiary having a value in excess of $100,000; (C) was
entered into outside the ordinary course of business; or (D) is material and
cannot be terminated by Parent without penalty with 30 days notice or less;
(iv) relating to the acquisition, issuance or transfer
of any securities;
(v) creating or relating to the creation of any
Encumbrance with respect to any of the Parent Proprietary Assets or other
assets having a value in excess of $100,000;
(vi) involving or incorporating any guaranty, pledge,
performance, completion bond, indemnity or contribution or surety
arrangement; or
(vii) creating or relating to any partnership, joint
venture, research or development collaboration, license agreement, or any
other Contract by which Parent or any Parent Subsidiary is obligated or has
the right to share any revenues, profits, losses, costs or Liabilities.
(b) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on Parent, all Material Parent Contracts are
in full force and effect and are enforceable against Parent and, to Parent's
knowledge, are enforceable against the other parties thereto, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, as limited by laws relating to the availability
of specific performance, injunctive relief, or by general equitable
principles, and to the extent any indemnification or contribution provisions
thereof may be limited by applicable federal or state securities laws.
Neither Parent nor any Parent Subsidiary has breached, or received in writing
any claim or threat
that it has breached, in any material respect, and no default has occurred
under, any of the Material Parent Contracts and, to Parent's knowledge, (i)
none of the other contracting parties has violated or breached, and no
default has occurred under any of the Material Parent Contracts, and (ii)
other than the transactions contemplated hereby, no event has occurred, and
no circumstance or condition exists which with the giving of notice or the
lapse of time, or both, will, or could reasonably be expected to, result in a
violation, breach or default under any Material Parent Contract or give any
Person the right to cancel, terminate or modify any Material Parent Contract.
To Parent's knowledge, no party to a Material Parent Contract currently in
effect has given notice to Parent or any Parent Subsidiary of intent to
terminate such Material Parent Contract in a way that would have a Material
Adverse Effect on Parent. Parent has provided the Company or the Company's
counsel with access to true and complete copies of each of the Material
Parent Contracts. Consummation of the transactions contemplated by this
Agreement and each other agreement to be entered into by Parent in connection
herewith will not (and will not give any Person a right to) cancel, terminate
or modify any material rights of, or accelerate or increase any material
obligation of, Parent under any Material Parent Contract.
(c) Parent and each Parent Subsidiary possess all material
Governmental Authorizations which are required in order to operate their
respective businesses as presently conducted, and Parent and each Parent
Subsidiary is in compliance in all material respects with all such
Governmental Authorizations. Each such Governmental Authorization is
identified in Schedule 3.8(c) of the Parent Disclosure Schedule. Each such
Governmental Authorization is valid and in full force and effect and will
remain so until consummation of the transactions contemplated by this
Agreement, except where the failure to comply would not have a Material
Adverse Effect on Parent.
(d) Except as set forth in Schedule 3.8(d) of the Parent
Disclosure Schedule, there are no claims made or, to Parent's knowledge,
threatened against Parent or any Parent Subsidiary under each Material Parent
Contract presently or heretofore in effect to the extent such claims,
individually or in the aggregate, have had or would reasonably be expected to
have a Material Adverse Effect on Parent.
3.9 PERMITS; COMPLIANCE WITH LEGAL REQUIREMENTS. Parent and each
Parent Subsidiary holds all permits, licenses, vacancies, order and appeals
which are material to the operation of Parent and the Parent Subsidiaries.
Parent and each Parent Subsidiary is, and has at all times since January 1,
1997 been, in compliance with all applicable Legal Requirements, except where
the failure to comply with such Legal Requirements has not had and would not
reasonably be expected to have a Material Adverse Effect on Parent. Since
January 1, 1997, neither Parent nor any Parent Subsidiary has received any
notice or other communication from any Governmental Body or other Person
regarding any actual or possible violation of, or failure to comply with, any
Legal Requirement.
3.10 CERTAIN BUSINESS PRACTICES. Neither Parent nor any Parent
Subsidiary nor (to the best of the knowledge of Parent) any director,
officer, agent or employee of Parent or any Parent Subsidiary has (i) used
any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
3.11 TAX MATTERS.
(a) Each Tax Return required to be filed by or on behalf of
Parent and each Parent Subsidiary with any Governmental Body with respect to
any taxable period ending on or before the Closing Date (the "Parent
Returns") (i) has been or will be filed on or before the applicable due date,
and (ii) has been, or will be when filed, prepared in all material respects
in compliance with all applicable Legal Requirements. All amounts shown on
the Parent Returns to be due on or before the Closing Date have been or will
be paid on or before the Closing Date.
(b) The Parent Unaudited Interim Balance Sheet fully accrues
all actual and contingent liabilities for Taxes with respect to all periods
through December 31, 1998 in accordance with generally accepted accounting
principles. Parent will establish, in the ordinary course of business and
consistent with its past practices, reserves adequate for the payment of all
Taxes for the period from December 31, 1998 through the Closing Date, and
will disclose the amount of such reserves to the Company no later than 10
business days prior to the Closing Date. Since December 31, 1998, Parent has
not incurred any Liability for any Tax other than in the ordinary course of
its business.
(c) No Parent Return has ever been examined or audited by any
Governmental Body. No extension or waiver of the limitation period
applicable to any of the Parent Returns has been granted (by Parent or any
other Person), and no such extension or waiver has been requested from Parent.
(d) No claim or Legal Proceeding is pending or, to the best
of the knowledge of Parent, has been threatened against or with respect to
Parent in respect of any material Tax. There are no unsatisfied liabilities
for material Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of
deficiency or similar document received by Parent with respect to any
material Tax (other than liabilities for Taxes asserted under any such notice
of deficiency or similar document which are being contested in good faith by
Parent and with respect to which adequate reserves for payment have been
established on the Parent Unaudited Interim Balance Sheet). There are no
liens for material Taxes upon any of the assets of Parent except liens for
current Taxes not yet due and payable. Parent has not entered into or become
bound by any agreement or consent pursuant to Section 341(f) of the Code (or
any comparable provision of state or foreign Tax laws). Parent has not been
and it will not be required to include any adjustment in taxable income for
any tax period (or portion thereof) pursuant to Section 481 or 263A of the
Code (or any comparable provision under state or foreign Tax laws) as a
result of transactions or events occurring, or accounting methods employed,
prior to the Closing.
(e) There is no agreement, plan, arrangement or other
Contract covering any employee or independent contractor or former employee
or independent contractor of Parent that, considered individually or
considered collectively with any other such Contracts, will, or could
reasonably be expected to, give rise directly or indirectly to the payment of
any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code (or
any comparable provision under state or foreign Tax laws). Parent is not,
nor has it ever been, a party to or bound by any tax indemnity agreement, tax
sharing agreement, tax allocation agreement or similar Contract.
3.12 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.12(a) of the Parent Disclosure Schedule
identifies each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay, medical, life,
disability or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program or agreement sponsored,
maintained, contributed to or required to be contributed to by Parent and/or
each Parent Subsidiary for the benefit of any current or former employee,
consultant, officer or director of Parent or any Parent Subsidiary (other
than those plans, programs and agreements disclosed in the Parent SEC
Documents).
(b) Except as set forth in Schedule 3.12(b) of the Parent
Disclosure Schedule, neither Parent nor any Parent Subsidiary maintains,
sponsors or contributes to, nor has at any time in the past maintained,
sponsored or contributed to, any employee pension benefit plan (as defined in
Section 3(2) of ERISA, whether or not excluded from coverage under specific
Titles or Subtitles of ERISA) for the benefit of employees or former
employees of Parent or any Parent Subsidiary. Except as set forth in
Schedule 3.12(b) of the Parent Disclosure Schedule, neither Parent nor any
Parent Subsidiary maintains, sponsors or contributes to, nor has at any time
in the past maintained, sponsored or contributed to, nor has any obligation
or liability (whether accrued, contingent or otherwise) with respect to, any
employee benefit plan (as defined in Schedule 3(3) of ERISA) or any other
plan, policy, program, arrangement or agreement that is: (i) subject to
Section 302 or Title IV of ERISA or Section 412 of the Code, (ii) a multi
employer plan (as defined in Section 3(37) or 4001(a)(3) of ERISA), or (iii)
provides welfare benefits to employees or former employees (or their
dependents) of Parent or any Parent Subsidiary following retirement or other
termination of employment (except as required by Section 4980B of the Code or
Title I, Subtitle B, Part 6 of ERISA).
(c) Each of the plans identified in Schedule 3.12(a) of the
Parent Disclosure Schedule intended to be qualified under Section 401(a) of
the Code has received a favorable determination from the Internal Revenue
Service, and Parent is not aware of any reason why any such determination
letter should be revoked. Each of the plans, programs and agreements
identified in Schedule 3.12(a) of the Parent Disclosure Schedule has been
maintained in compliance in all material respects with its terms and, both as
to form and in operation, with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations, including without
limitation, ERISA and the Code. Parent has delivered to the Company with
respect to each plan, program or agreement identified in Schedule 3.12(a) of
the Parent Disclosure Schedule, a copy of: (i) the document under which such
plan, program or agreement is maintained and all amendments thereto (and all
related funding instruments), (ii) the most recent determination letter
issued by the Internal Revenue Service (if applicable) and (iii) the most
recent Form 5500 filed with respect to such plan, program or agreement (if
applicable).
(d) Except as disclosed in Schedule 3.12(d) of the Parent
Disclosure Schedule or in the Parent SEC Documents, neither the execution,
delivery or performance of this
Agreement, nor the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will result in any payment
(including any bonus, golden parachute or severance payment) to any current
or former employee or director of Parent (whether or not under any plan), or
materially increase the benefits payable under any plan, or result in any
acceleration of the time of payment or vesting of any such benefits.
(e) Parent and each Parent Subsidiary is in compliance with
all applicable Legal Requirements and Contracts relating to employment,
employment practices, wages, bonuses and terms and conditions of employment,
including employee compensation matters, except where the failure to be in
compliance would not have a Material Adverse Effect on Parent.
3.13 INSURANCE. Parent has made available to the Company a copy of
all material insurance policies and all material self insurance programs and
arrangements relating to the business, assets and operations of Parent and
each Parent Subsidiary. Each of such insurance policies is in full force and
effect. Since January 1, 1997, Parent has not received any notice or other
communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or
rejection of any material claim under any insurance policy, or (c) material
adjustment in the amount of the premiums payable with respect to any
insurance policy. Except as set forth in Schedule 3.13 of the Parent
Disclosure Schedule, there is no pending workers' compensation or other claim
under or based upon any insurance policy of Parent or any Parent Subsidiary.
3.14 TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule
3.14 of the Parent Disclosure Schedule or the Parent SEC Documents or as
contemplated by this Agreement, since the date of Parent's last proxy
statement filed with the SEC, no event has occurred that would be required to
be reported by Parent pursuant to Item 404 of Regulation S-K promulgated by
the SEC. Schedule 3.14 of the Parent Disclosure Schedule identifies each
person who is (or who may be deemed to be) an "affiliate" (as that term is
used in Rule 145 under the Securities Act) of Parent as of the date of this
Agreement.
3.15 LITIGATION. Except as disclosed in Parent SEC Documents,
there is no Legal Proceeding pending or, to Parent's knowledge, threatened by
or before any court or Governmental Authority that involves Parent or any
Parent Subsidiary or any of the assets owned or used by Parent or any Parent
Subsidiary. Neither Parent nor any Parent Subsidiary is a party to any
decree, order, writ, injunction, judgment or arbitration award (or agreement
entered into in any Legal Proceeding) with respect to its properties, assets,
personnel or business activities.
3.16 PROPERTIES. Schedule 3.16 of the Parent Disclosure Schedule
sets forth each lease of real and personal property to which Parent and each
Parent Subsidiary is a party (the "Parent Leases"). Parent has previously
made available to the Company complete and accurate copies of all the Parent
Leases. Each of the Parent Leases is valid, binding and enforceable in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, as limited
by laws relating to the availability of specific performance, injunctive
relief, or by general equitable principles, and to the extent any
indemnification or contribution provisions thereof may be limited by
applicable federal or
state securities laws. Neither Parent nor any Parent Subsidiary has
breached, nor received in writing any claim or threat that it has breached,
in any material respect, and no default has occurred under any of the Parent
Leases and, to Parent's knowledge, (i) none of the other contracting parties
has violated or breached, and no default has occurred under any of the Parent
Leases, and (ii) other than the transactions contemplated hereby, no event
has occurred, and no circumstance or condition exists which with the giving
of notice or the lapse of time, or both, will, or could reasonably be
expected to, result in a violation, breach or default under any of the Parent
Leases or give any Person the right to cancel, terminate or modify any of the
Parent Leases. Neither Parent nor any Parent Subsidiary owns any real
property.
3.17 ENVIRONMENTAL MATTERS. To the knowledge of Parent, no current
owner of any property leased or controlled by the Parent or any Parent
Subsidiary has received any notice (in writing or otherwise), whether from a
Governmental Body, citizens group, employee or otherwise, that alleges that
such current or prior owner or Parent or any Parent Subsidiary is not in
compliance with any Environmental Law. Parent has not received any notice or
information that any property that is leased to, controlled by or used by
Parent or any Parent Subsidiary, or any surface water, groundwater and soil
associated with or adjacent to such property, is not in clean and healthful
condition or that it is not free of any material environmental contamination.
For purposes of this Section 3.17: (i) "Environmental Law" means any
federal, state, local or foreign Legal Requirement relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata), including any law or
regulation relating to emissions, discharges, releases or threatened releases
of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern; and (ii)
"Materials of Environmental Concern" include chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and
any other substance that is now or hereafter regulated by any Environmental
Law or that is otherwise a danger to health, reproduction or the environment.
3.18 PARENT ACTION. The board of directors of Parent (at a meeting
duly called and held) has (a) unanimously determined that the Merger is in
the best interests of Parent and its shareholders, (b) unanimously approved
this Agreement and the Merger in accordance with the provisions of Section
1200 of the CCC, (c) unanimously recommended the adoption and approval of
this Agreement and the Merger by the shareholders of Parent and directed that
the Merger be submitted for consideration by Parent's shareholders at the
Parent Shareholders' Meeting, and (d) adopted a resolution having the effect
of causing Parent not to be subject, to the extent permitted by applicable
law, to any state takeover law that may purport to be applicable to the
Merger and the other transactions contemplated by this Agreement.
3.19 ENFORCEABILITY. Parent has all requisite corporate power and
authority to execute, deliver and, subject to obtaining requisite shareholder
approval, to perform its obligations under this Agreement and all other
agreements, documents and instruments contemplated hereby to which it is or
will become a party. The execution and delivery of this Agreement and the
other agreements, documents and instruments contemplated hereby have been
duly and validly authorized by the board of directors of Parent, and no other
corporate proceedings on the part of Parent are necessary for Parent to
authorize any of such agreements, documents or instruments and no such
corporate proceedings (other than the approval of the
Parent Shareholders) are necessary to enable Parent to consummate the Merger
or any of the other transactions contemplated by this Agreement. All
agreements, documents and instruments to be executed in connection with the
Merger (a) have been (or will be) duly executed and delivered by duly
authorized officers of Parent and (b) constitute (or, when executed by
Parent, will constitute) legal, valid and binding obligations of Parent
enforceable against it in accordance with their terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally, as limited by laws relating to the availability of specific
performance, injunctive relief, or by general equitable principles, and to
the extent any indemnification or contribution provisions thereof may be
limited by applicable federal or state securities laws.
3.20 GOVERNMENTAL CONSENTS; NO CONFLICTS. Except as may be
required under the Applicable Regulatory Requirements, there is no
requirement applicable to Parent or any Parent Subsidiary to make any filing
with, or to obtain any permit, authorization, or Consent of, any Governmental
Authority as a condition to the consummation of the Merger or any of the
other transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement and the other agreements, documents and
instruments contemplated hereby by Parent nor the consummation by Parent of
the Merger or any of the other transactions contemplated by this Agreement
will (a) violate the Articles of Incorporation or Bylaws of Parent, (b)
result in a default (or with notice or lapse of time or both would result in
a default) under, or materially impair the rights of Parent or any Parent
Subsidiary or materially alter the rights or obligations of any third party
under, or require Parent or any Parent Subsidiary to make any material
payment or become subject to any material liability to any third party under,
or give rise to any right of termination, amendment, cancellation,
acceleration, repurchase, put or call under, any of the terms, conditions or
provisions of any Material Parent Contract, (c) result in the creation of any
material (individually or in the aggregate) Encumbrance on any of the assets
of Parent or any Parent Subsidiary or (d) conflict with or violate any law,
statute, rule, regulation, judgment, order, writ, injunction, decree or
arbitration award applicable to Parent or any Parent Subsidiary or any of
their assets, which conflict or violation has had or would reasonably be
expected to have a Material Adverse Effect on Parent.
3.21 YEAR 2000 PREPAREDNESS. There are no issues related to
Parent's or any Parent Subsidiary's preparedness for the Year 2000
(including, without limitation, any issues relating to Parent's or Parent
Subsidiary's internal computer systems and each Constituent Component of
those systems and all computer related products and each Constituent
Component of such products) that are of a character required to be described
or referred to in the Parent SEC Documents by the Securities Act or by the
Exchange Act which have not been accurately described in the Parent SEC
Documents. Except as otherwise disclosed in the Parent SEC Documents, Parent
has inquired of material vendors as to their preparedness for the Year 2000
and has disclosed in the Parent Disclosure Schedule or Parent SEC Documents
any issues that might reasonably be expected to result in any Material
Adverse Effect on Parent.
3.22 REGULATORY MATTERS.
(a) Except as disclosed on Schedule 3.22(a) of the Parent
Disclosure Schedule, Parent has obtained and is in compliance in all material
respects with all certifications, approvals and clearances from the FDA, etc.
necessary in order to carry out its business and the
businesses of each Parent Subsidiary as currently conducted, including
without limitation developing pharmaceutical products in any and all
geographic areas in which Parent or any Parent Subsidiary is currently, or
have previously, developed pharmaceutical products.
(b) All nonclinical laboratory studies of pharmaceutical
products have been and are being conducted in all material respects in
compliance with all applicable federal, state, local and foreign laws, rules
and regulations (including, without limitation, any reporting requirements
thereof) and with accepted standards of good laboratory practice. All
clinical trials of pharmaceutical products have been and are being conducted
in all material respects in compliance with all applicable federal, state,
local and foreign laws, rules and regulations (including, without limitation,
any reporting requirements thereof) and with accepted standards of good
clinical practice.
(c) Neither Parent nor any Parent Subsidiary nor any officer,
employee or agent of Parent or any Parent Subsidiary has made any untrue
statement of a material fact or fraudulent statement to the FDA, etc. or
failed to disclose a material fact required to be disclosed to the FDA, etc.
Parent has provided the Company with copies of any and all notice of
inspectional observations, establishment inspection reports and any other
documents received from the FDA, etc. that indicate or suggest material lack
of compliance with the regulatory requirements of the FDA, etc. Parent has
made available to the Company for review all correspondence to or from the
FDA, etc., minutes of meetings with the FDA, etc., written reports of phone
conversations, visits or other contact with the FDA, etc., notices of
inspectional observations, establishment inspection reports, and all other
documents in its possession concerning communications to or from the FDA,
etc., or prepared by the FDA, etc., which bear in any way on Parent's or any
Parent Subsidiary's compliance with regulatory requirements of the FDA, etc.
or on the likelihood of timing of approval of any pharmaceutical product.
3.23 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the shares of Parent Common Stock outstanding on the record date
for the Parent Shareholders' Meeting (the "Required Parent Shareholder Vote")
is the only vote of the holders of any class or series of Parent's capital
stock necessary to approve and consummate this Agreement, the Merger and the
other transactions contemplated by this Agreement.
3.24 FAIRNESS OPINION. Parent's board of directors has received
the written opinion of EVEREN Securities, Inc., financial advisor to Parent,
dated the date of this Agreement, to the effect that the Merger is fair to
the shareholders of Parent from a financial point of view. Parent has
furnished an accurate and complete copy of said written opinion to the
Company.
3.25 FINANCIAL ADVISOR. Except for EVEREN Securities, Inc., no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent. Parent has furnished to the Company accurate and
complete copies of all agreements under which any such fees, commissions or
other amounts have been paid or may become payable and all indemnification
and other agreements related to the engagement of EVEREN Securities, Inc.
3.26 VOTING AGREEMENTS. Each member of the board of directors and
each executive officer of Parent has agreed on behalf of himself and his
affiliates to vote in favor of the Merger at the Parent Shareholders' Meeting
and has executed and delivered to the Company a Voting Agreement
substantially in the form attached hereto as Exhibit E-3.
3.27 DISCLOSURE.
(a) The copies of all documents furnished by Parent pursuant
to the terms of this Agreement are complete and accurate copies of the
original, as such documents may have been amended to date.
(b) None of the representations and warranties of Parent
contained in Section 3 of this Agreement or in any other Section of this
Agreement or the information disclosed in the Parent Disclosure Schedule
contains any untrue statement of a material fact or omits 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 are made,
not misleading.
(c) None of the information supplied or to be supplied by
Parent for inclusion or incorporation by reference in the Form S-4
registration statement to be filed with the SEC by the Company in connection
with the issuance of the Merger Shares (the "S-4 Registration Statement")
will, at the time the S-4 Registration Statement is filed with the SEC or at
the time the S-4 Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading. None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in the
Prospectus/Joint Proxy Statement, will, at the time the Prospectus/Joint
Proxy Statement is mailed to the shareholders of Parent or the stockholders
of the Company, at the time of the Parent Shareholders' Meeting or the
Company Shareholders' Meeting and as of the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, no representation or warranty is
made by Parent with respect to statements made about the Company or Merger
Sub or based on information supplied by the Company or Merger Sub or any of
their representatives which is contained in the S-4 Registration Statement or
the Prospectus/Joint Proxy Statement. The Prospectus/Joint Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated by the SEC thereunder.
3.28 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement, has engaged in no other business activities and has conducted its
operations only as contemplated by this Agreement.
4. CERTAIN COVENANTS OF PARENT, MERGER SUB AND THE COMPANY
4.1 COMPANY ACCESS AND INVESTIGATION. During the period from the
date of this Agreement through the Effective Time (the "Pre-Closing Period"),
the Company shall, and
shall cause the respective Representatives of the Company to: (a) provide
Parent and Parent's Representatives with reasonable access to the Company's
Representatives, personnel and assets and to all existing books, records, Tax
Returns, work papers and other documents and information relating to the
Company; and (b) provide Parent and Parent's Representatives with such copies
of the existing books, records, Tax Returns, work papers and other documents
and information relating to the Company, and with such additional financial,
operating and other data and information regarding the Company, as Parent may
reasonably request. Without limiting the generality of the foregoing, during
the Pre-Closing Period, the Company shall promptly provide Parent with copies
of:
(i) all material operating and financial reports
prepared by the Company and each Company Subsidiary for the Company's senior
management, including (A) copies of the unaudited monthly consolidated
balance sheets of the Company and the related unaudited monthly consolidated
statements of operations, statements of stockholders' equity and statements
of cash flows and (B) copies of any sales forecasts, marketing plans,
development plans, discount reports, write-off reports, hiring reports and
capital expenditure reports prepared for the Company's senior management;
(ii) any written materials or communications sent by or
on behalf of the Company to its stockholders;
(iii) any material notice, document or other
communication sent by or on behalf of the Company or any Company Subsidiary
to any party to any Company Contract or sent to the Company or any Company
Subsidiary by any party to any Company Contract (other than any communication
that relates solely to routine commercial transactions between the Company
and the other party to any such Company Contract and that is of the type sent
in the ordinary course of business and consistent with past practices); and
(iv) any notice, report or other document received by
the Company or any Company Subsidiary from, or filed with or sent by the
Company or any Company Subsidiary to any Governmental Body.
4.2 OPERATION OF THE COMPANY'S BUSINESS.
(a) During the Pre-Closing Period: (i) the Company shall
ensure that the Company and each Company Subsidiary conducts its business and
operations (A) in the ordinary course and in accordance with past practices
and (B) in compliance with all applicable Legal Requirements and the
requirements of all Company Contracts that constitute Material Company
Contracts; (ii) the Company shall use all reasonable efforts to ensure that
the Company and each Company Subsidiary preserves intact its current business
organization, keeps available the services of its current officers and other
employees and maintains its relations and goodwill with all suppliers,
customers, landlords, creditors, licensors, licensees, employees, consultants
and other Persons having business relationships with the Company or a Company
Subsidiary; (iii) the Company shall keep in full force all insurance policies
referred to in Section 2.13; and (iv) the Company shall (to the extent
requested by Parent) cause its officers and the officers of each Company
Subsidiary to report regularly to Parent concerning the status of the
Company's and each Company Subsidiary's business.
(b) During the Pre-Closing Period, the Company shall not,
except as set forth on Schedule 4.2(b), (without the prior written consent of
Parent), and shall not permit any Company Subsidiary to:
(i) declare, accrue, set aside or pay any dividend or
make any other distribution in respect of any shares of capital stock, or
repurchase, redeem or otherwise reacquire any shares of capital stock or
other securities (except for any repurchase of Company Warrants in accordance
with their existing terms);
(ii) sell, issue, grant or authorize the issuance or
grant of (A) any capital stock or other security, (B) any option, call,
warrant or right to acquire any capital stock or other security, or (C) any
instrument convertible into or exchangeable for any capital stock or other
security (except that the Company may issue shares and grant options to
purchase shares of Company Common Stock under stock option plans approved by
its board of directors and stockholders totaling up to 100,000 shares and
issue shares of Company Common Stock (w) upon the valid exercise of Company
Options outstanding as of the date of this Agreement or such additional
options, (x) pursuant to the ESPP, (y) upon the exercise of Company Warrants
outstanding as of the date of this Agreement and (z) upon the conversion of
Company Preferred Stock outstanding as of the date of this Agreement);
(iii) amend or waive any of its rights under, or
accelerate the vesting under, any provision of any of the Company's stock
option plans, any provision of any agreement evidencing any outstanding stock
option or any restricted stock purchase agreement, other than pursuant to
agreements in existence on the date hereof, copies of which have been
provided to the other parties hereto, or otherwise modify any of the terms of
any outstanding option, warrant or other security or any related Contract;
(iv) amend or permit the adoption of any amendment to
its certificate of incorporation or bylaws or other charter or organizational
documents, adopt any shareholder rights plan ("poison pill") or effect or
become a party to any merger, consolidation, amalgamation, share exchange,
business combination, recapitalization, reclassification of shares, stock
split, division or subdivision of shares, reverse stock split, consolidation
of shares or similar transaction;
(v) form any Subsidiary or acquire any equity interest
or other interest in any other Entity or any other business;
(vi) make any capital expenditure in excess of $100,000;
(vii) enter into or become bound by, or permit any of
the assets owned or used by it to become bound by, any Company Collaboration
Agreement or any Material Company Contract, or amend or terminate, or waive
or exercise any Company Collaboration Agreement or any material right or
remedy under, any Material Company Contract, other than in the ordinary
course of business consistent with past practices;
(viii) acquire, lease or license any right or other asset
from any other Person or sell or otherwise dispose of, or lease or license,
any right or other asset to any other Person (except in each case for
immaterial assets (other than Company Proprietary Assets)
acquired, leased, licensed or disposed of by the Company in the ordinary
course of business and consistent with past practices), or waive or
relinquish any material right;
(ix) lend money to any Person, or incur or guarantee
any indebtedness;
(x) establish, adopt or amend any employee benefit
plan, pay any bonus or make any profit-sharing or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or
other compensation or remuneration payable to, any of its directors, officers
or employees;
(xi) prepay any material claim, Liability or
obligation, or pay, discharge or satisfy any material unliquidated or
contingent Liability;
(xii) enter into or amend any employment agreement,
severance agreement, special pay arrangement with respect to termination of
employment or other similar arrangement or agreement with any director,
officer or employee of the Company,
(xiii) make or fail to make any material election
concerning the term, scope or termination of any real property lease, or
waive any material provision of any such lease or enter into any new real
property lease;
(xiv) engage in any transaction with any stockholder,
director, officer or employee other than in the ordinary course of business
consistent with past practice;
(xv) make any Tax election;
(xvi) commence or settle any Legal Proceeding;
(xvii) enter into any material transaction or take any
other material action outside the ordinary course of business or inconsistent
with past practices; or
(xviii) agree or commit to take any of the actions
described in clauses "(i)" through "(xviii)" of this Section 4.2(b).
(c) During the Pre-Closing Period, the Company shall promptly
notify Parent in writing of: (i) the discovery by the Company of any event,
condition, fact or circumstance that occurred or existed on or prior to the
date of this Agreement and that caused or constitutes a material inaccuracy
in any representation or warranty made by the Company in this Agreement; (ii)
any event, condition, fact or circumstance that occurs, arises or exists
after the date of this Agreement and that would cause or constitute a
material inaccuracy in any representation or warranty made by the Company in
this Agreement if (A) such representation or warranty had been made as of the
time of the occurrence, existence or discovery of such event, condition, fact
or circumstance, or (B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement; (iii)
any material breach of any covenant or obligation of the Company; and (iv)
any event, condition, fact or circumstance that would make the timely
satisfaction of any of the conditions set forth in Section 6 or Section 7
impossible or unlikely or that has had or could reasonably be expected to
have a Material
Adverse Effect on the Company or any Company Subsidiary. Without limiting
the generality of the foregoing, the Company shall promptly advise Parent in
writing of any Legal Proceeding or other claim threatened, commenced or
asserted against or with respect to the Company or any Company Subsidiary.
No notification given to Parent pursuant to this Section 4.2(c) shall limit,
modify, amend or otherwise affect any of the representations, warranties,
covenants or obligations of the Company contained in this Agreement.
4.3 NO SOLICITATION.
(a) The Company shall not directly or indirectly, and shall
not authorize or permit any Representative of the Company directly or
indirectly to, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Company Acquisition Proposal or take any
action that could reasonably be expected to lead to any inquiries related to
or the making of a Company Acquisition Proposal, (ii) furnish any information
regarding the Company or any Company Subsidiary to any Person in connection
with or in response to any inquiry relating to a Company Acquisition
Proposal, (iii) engage in discussions or negotiations with any Person with
respect to any Company Acquisition Proposal, (iv) approve, endorse or
recommend any Company Acquisition Proposal or (v) enter into any letter of
intent or similar document or any Contract contemplating or otherwise
relating to any Company Acquisition Transaction; PROVIDED, HOWEVER, that
prior to the adoption and approval of this Agreement by the Required Company
Stockholder Vote, the Company shall not be prohibited by this Section 4.3(a)
from (A) furnishing nonpublic information regarding the Company or any
Company Subsidiary to, or entering into discussions with, any Person in
response to a Company Superior Offer that is submitted by such Person (and
not withdrawn) relating to a Company Acquisition Transaction if (1) neither
the Company nor any Representative of the Company shall have violated any of
the restrictions set forth in this Section 4.3, (2) the board of directors of
the Company concludes in good faith, based upon the advice of its outside
legal counsel, that the failure to provide information in response to a
written request by a Person making a Company Acquisition Proposal and the
failure to consider the Company Acquisition Proposal would be reasonably
likely to constitute a breach of its fiduciary obligations to the Company's
stockholders under applicable law, (3) prior to furnishing any such nonpublic
information to, or entering into discussions with, such Person, the Company
gives Parent written notice of the identity of such Person, the terms and
conditions of such Company Superior Offer and of the Company's intention to
furnish nonpublic information to, or enter into discussions with, such
Person, and it receives from such Person an executed confidentiality
agreement containing customary limitations on the use and disclosure of all
nonpublic written and oral information furnished to such Person by or on
behalf of the Company and (4) prior to furnishing any such nonpublic
information to such Person, the Company furnishes such nonpublic information
to Parent (to the extent such nonpublic information has not been previously
furnished by the Company to Parent), (B) withdrawing or modifying its
unanimous recommendation referred to in Section 5.2(b) following receipt of a
Company Superior Offer if after duly considering the advice of outside
counsel to the Company, the board of directors of the Company determines in
good faith that failure to do so would be reasonably likely to constitute a
breach of its fiduciary obligations to the Company's stockholders under
applicable law, or (C) complying with Rule 14e-2 promulgated under the
Exchange Act with regard to a Company Acquisition Transaction. Without
limiting the generality of the foregoing, the Company acknowledges and agrees
that any violation of any of the restrictions set forth in the preceding
sentence by any of its Representatives, whether or not such Representative is
purporting to act on behalf of the Company, shall be deemed to constitute a
breach of this Section 4.3 by the Company. Nothing contained in this Section
4.3 shall limit the Company's obligation to call, give notice of, convene and
hold the Company Stockholders' Meeting in accordance with Section 5.2.
(b) The Company shall promptly advise Parent orally and in
writing of any Company Acquisition Proposal (including the identity of the
Person making or submitting such Company Acquisition Proposal and the terms
thereof) that is made or submitted by any Person during the Pre-Closing
Period regardless of whether the Company intends to furnish any information
to the Person making any such Company Acquisition Proposal. The Company
shall keep Parent fully informed with respect to the status of any such
Company Acquisition Proposal and any modification or proposed modification
thereto. Prior to entering into any agreement or Contract with any Person in
response to a Company Superior Offer, the Company shall give Parent the
opportunity to match such Company Superior Offer by providing Parent with the
terms of such Company Superior Offer in writing and allowing Parent three (3)
business days to respond with a new offer. Each amendment or modification to
any proposed Company Acquisition Transaction or Company Superior Offer shall
be considered a new and separate proposal for a Company Acquisition
Transaction or Company Superior Offer for the purposes of this Agreement.
(c) The Company shall immediately cease and cause to be
terminated any existing discussions with any Person that relate to any
Company Acquisition Proposal.
4.4 PARENT ACCESS AND INVESTIGATION. During the Pre-Closing
Period, Parent shall, and shall cause the respective Representatives of
Parent to: (a) provide the Company and the Company's Representatives with
reasonable access to Parent's Representatives, personnel and assets and to
all existing books, records, Tax Returns, work papers and other documents and
information relating to Parent; and (b) provide the Company and the Company's
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to Parent, and with
such additional financial, operating and other data and information regarding
Parent, as the Company may reasonably request. Without limiting the
generality of the foregoing, during the Pre-Closing Period, Parent shall
promptly provide the Company with copies of:
(i) all material operating and financial reports
prepared by Parent and each Parent Subsidiary for Parent's senior management,
including (A) copies of the unaudited monthly consolidated balance sheets of
Parent and the related unaudited monthly consolidated statements of
operations, statements of shareholders' equity and statements of cash flows
and (B) copies of any sales forecasts, marketing plans, development plans,
discount reports, write-off reports, hiring reports and capital expenditure
reports prepared for Parent's senior management;
(ii) any written materials or communications sent by or
on behalf of Parent to its shareholders;
(iii) any material notice, document or other
communication sent by or on behalf of Parent or any Parent Subsidiary to any
party to any Parent Contract or sent to Parent or any Parent Subsidiary by
any party to any Parent Contract (other than any communication that relates
solely to routine commercial transactions between Parent and the other party
to any such Parent Contract and that is of the type sent in the ordinary
course of business and consistent with past practices); and
(iv) any notice, report or other document received by
Parent or any Parent Subsidiary from, or filed with or sent by Parent or any
Parent Subsidiary to any Governmental Body.
4.5 OPERATION OF PARENT'S BUSINESS.
(a) During the Pre-Closing Period: (i) Parent shall ensure
that Parent and each Parent Subsidiary conducts its business and operations
(A) in the ordinary course and in accordance with past practices and (B) in
compliance with all applicable Legal Requirements and the requirements of all
Parent Contracts that constitute Material Parent Contracts; (ii) Parent shall
use all reasonable efforts to ensure that Parent and each Parent Subsidiary
preserves intact its current business organization, keeps available the
services of its current officers and other employees and maintains its
relations and goodwill with all suppliers, customers, landlords, creditors,
licensors, licensees, employees, consultants and other Persons having
business relationships with Parent or a Parent Subsidiary; (iii) Parent shall
keep in full force all insurance policies referred to in Section 3.13; and
(iv) Parent shall (to the extent requested by the Company) cause its officers
and the officers of each Parent Subsidiary to report regularly to the Company
concerning the status of Parent's and each Parent's and each Parent
Subsidiary's business.
(b) During the Pre-Closing Period, Parent shall not, except
as set forth in Schedule 4.5(b) (without the prior written consent of the
Company), and shall not permit any Parent Subsidiary to:
(i) declare, accrue, set aside or pay any dividend or
make any other distribution in respect of any shares of capital stock, or
repurchase, redeem or otherwise reacquire any shares of capital stock or
other securities;
(ii) sell, issue, grant or authorize the issuance or
grant of (A) any capital stock or other security, (B) any option, call,
warrant or right to acquire any capital stock or other security, or (C) any
instrument convertible into or exchangeable for any capital stock or other
security (except that Parent may issue shares and grant options to purchase
shares of Parent Common Stock under stock option plans approved by its board
of directors and shareholders totaling up to 100,000 and issue shares of
Parent Common Stock (x) upon the valid exercise of Parent Options outstanding
as of the date of this Agreement or such additional options, and (y) upon the
exercise of Parent Warrants outstanding as of the date of this Agreement),
and except that Parent may amend its stock option plan(s) to authorize
additional shares of Parent Common Stock for issuance thereunder in
connection with the conversion of the Company Options at the Effective Time
("Parent Option Plan Amendments");
(iii) amend or waive any of its rights under, or
accelerate the vesting under, any provision of any of Parent's stock option
plans, any provision of any agreement evidencing any outstanding stock option
or any restricted stock purchase agreement, other than pursuant to agreements
in existence on the date hereof, copies of which have been provided to the
other parties hereto, or otherwise modify any of the terms of any outstanding
option, warrant or other security or any related Contract;
(iv) amend or permit the adoption of any amendment to
its articles of incorporation (other than the Amended Articles) or bylaws or
other charter or organizational documents, adopt any shareholder rights plan
("poison pill") or effect or become a party to any merger, consolidation,
amalgamation, share exchange, business combination, recapitalization,
reclassification of shares, stock split, division or subdivision of shares,
reverse stock split, consolidation of shares or similar transaction;
(v) form any Subsidiary or acquire any equity interest
or other interest in any other Entity or any other business;
(vi) make any capital expenditure in excess of $100,000;
(vii) enter into or become bound by, or permit any of
the assets owned or used by it to become bound by, any Parent Collaboration
Agreement or any Material Parent Contract, or amend or terminate, or waive or
exercise any material right or remedy under, any Parent Collaboration
Agreement or any Material Parent Contract, other than in the ordinary course
of business consistent with past practices;
(viii) acquire, lease or license any right or other asset
from any other Person or sell or otherwise dispose of, or lease or license,
any right or other asset to any other Person (except in each case for
immaterial assets (other than Parent Proprietary Assets) acquired, leased,
licensed or disposed of by Parent in the ordinary course of business and
consistent with past practices), or waive or relinquish any material right;
(ix) lend money to any Person, or incur or guarantee
any indebtedness;
(x) establish, adopt or amend any employee benefit
plan, pay any bonus or make any profit-sharing or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or
other compensation or remuneration payable to, any of its directors, officers
or employees;
(xi) prepay any material claim, Liability or
obligation, or pay, discharge or satisfy any material unliquidated or
contingent Liability;
(xii) enter into or amend any employment agreement,
severance agreement, special pay arrangement with respect to termination of
employment or other similar arrangement or agreement with any director,
officer or employee of Parent,
(xiii) make or fail to make any material election
concerning the term, scope or termination of any real property lease, or
waive any material provision of any such lease or enter into any new real
property lease;
(xiv) engage in any transaction with any shareholder,
director, officer or employee other than in the ordinary course of business
consistent with past practice;
(xv) make any Tax election;
(xvi) commence or settle any Legal Proceeding;
(xvii) enter into any material transaction or take any
other material action outside the ordinary course of business or inconsistent
with past practices; or
(xviii) agree or commit to take any of the actions
described in clauses "(i)" through "(xviii)" of this Section 4.5(b).
(c) During the Pre-Closing Period, Parent shall promptly
notify the Company in writing of: (i) the discovery by Parent of any event,
condition, fact or circumstance that occurred or existed on or prior to the
date of this Agreement and that caused or constitutes a material inaccuracy
in any representation or warranty made by Parent in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after
the date of this Agreement and that would cause or constitute a material
inaccuracy in any representation or warranty made by Parent in this Agreement
if (A) such representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement; (iii)
any material breach of any covenant or obligation of Parent; and (iv) any
event, condition, fact or circumstance that would make the timely
satisfaction of any of the conditions set forth in Section 6 or Section 7
impossible or unlikely or that has had or could reasonably be expected to
have a Material Adverse Effect on Parent or any Parent Subsidiary. Without
limiting the generality of the foregoing, Parent shall promptly advise the
Company in writing of any Legal Proceeding or other claim threatened,
commenced or asserted against or with respect to Parent or any Parent
Subsidiary. No notification given to the Company pursuant to this Section
4.5(c) shall limit, modify, amend or otherwise affect any of the
representations, warranties, covenants or obligations of Parent contained in
this Agreement.
4.6 NO SOLICITATION.
(a) Parent shall not directly or indirectly, and shall not
authorize or permit any Representative of Parent directly or indirectly to,
(i) solicit, initiate, encourage or induce the making, submission or
announcement of any Parent Acquisition Proposal or take any action that could
reasonably be expected to lead to any inquiries related to or the making of a
Parent Acquisition Proposal, (ii) furnish any information regarding Parent or
any Parent Subsidiary to any Person in connection with or in response to any
inquiry relating to a Parent Acquisition Proposal, (iii) engage in
discussions or negotiations with any Person with respect to any Parent
Acquisition Proposal, (iv) approve, endorse or recommend any Parent
Acquisition Proposal or (v) enter into any letter of intent or similar
document or any Contract contemplating or otherwise relating to any Parent
Acquisition Transaction; PROVIDED, HOWEVER, that prior to the
adoption and approval of this Agreement by the Required Parent Shareholder
Vote, Parent shall not be prohibited by this Section 4.6(a) from (A)
furnishing nonpublic information regarding Parent or any Parent Subsidiary
to, or entering into discussions with, any Person in response to a Parent
Superior Offer that is submitted by such Person (and not withdrawn) relating
to a Parent Acquisition Transaction if (1) neither Parent nor any
Representative of Parent shall have violated any of the restrictions set
forth in this Section 4.6, (2) the board of directors of Parent concludes in
good faith, based upon the advice of its outside legal counsel, that the
failure to provide information in response to a written request by a Person
making a Parent Acquisition Proposal and the failure to consider the Parent
Acquisition Proposal would be reasonably likely to constitute a breach of its
fiduciary obligations to Parent's shareholders under applicable law, (3) at
least five (5) business days prior to furnishing any such nonpublic
information to, or entering into discussions with, such Person, Parent gives
the Company written notice of the identity of such Person, the terms and
conditions of such Parent Superior Offer and of Parent's intention to furnish
nonpublic information to, or enter into discussions with, such Person, and it
receives from such Person an executed confidentiality agreement containing
customary limitations on the use and disclosure of all nonpublic written and
oral information furnished to such Person by or on behalf of Parent and (4)
prior to furnishing any such nonpublic information to such Person, Parent
furnishes such nonpublic information to the Company (to the extent such
nonpublic information has not been previously furnished by Parent to the
Company), (B) withdrawing or modifying its unanimous recommendation referred
to in Section 5.3(b) following receipt of a Parent Superior Offer if after
duly considering the advice of outside counsel to Parent, the board of
directors of Parent determines in good faith that failure to do so would be
reasonably likely to constitute a breach of its fiduciary obligations to
Parent's shareholders under applicable law, or (C) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a Parent Acquisition
Transaction. Without limiting the generality of the foregoing, Parent
acknowledges and agrees that any violation of any of the restrictions set
forth in the preceding sentence by any of its Representatives, whether or not
such Representative is purporting to act on behalf of Parent, shall be deemed
to constitute a breach of this Section 4.6 by Parent. Nothing contained in
this Section 4.6 shall limit Parent's obligation to call, give notice of,
convene and hold the Parent Shareholders' Meeting in accordance with Section
5.3.
(b) Parent shall promptly advise the Company orally and in
writing of any Parent Acquisition Proposal (including the identity of the
Person making or submitting such Parent Acquisition Proposal and the terms
thereof) that is made or submitted by any Person during the Pre-Closing
Period regardless of whether Parent intends to furnish any information to the
Person making any such Parent Acquisition Proposal. Parent shall keep the
Company fully informed with respect to the status of any such Parent
Acquisition Proposal and any modification or proposed modification thereto.
Prior to entering into any agreement or Contract with any Person in response
to a Parent Superior Offer, Parent shall give the Company the opportunity to
match such Parent Superior Offer by providing the Company with the terms of
such Parent Superior Offer in writing and allowing the Company five (5)
business days to respond with a new offer. Each amendment or modification to
any proposed Parent Acquisition Transaction or Parent Superior Offer shall be
considered a new and separate proposal for a Parent Acquisition Transaction
or Parent Superior Offer for the purposes of this Agreement.
(c) Parent shall immediately cease and cause to be terminated
any existing discussions with any Person that relate to any Parent
Acquisition Proposal.
5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 REGISTRATION STATEMENT; PROSPECTUS/PROXY STATEMENT.
(a) As promptly as practicable after the date of this
Agreement, Parent and the Company shall prepare and cause to be filed with
the SEC the Prospectus/Proxy Statement and Parent shall prepare and cause to
be filed with the SEC the Form S-4 Registration Statement, in which the
Prospectus/Proxy Statement will be included as a prospectus. Each of Parent
and the Company shall use all reasonable efforts to cause the Form S-4
Registration Statement and the Prospectus/Proxy Statement to comply with the
rules and regulations promulgated by the SEC, to respond promptly to any
comments of the SEC or its staff and to have the Form S-4 Registration
Statement declared effective under the Securities Act as promptly as
practicable after it is filed with the SEC. Each of the Company and Parent
will use all reasonable efforts to cause the Prospectus/Proxy Statement to be
mailed to their respective stockholders as promptly as practicable after the
Form S-4 Registration Statement is declared effective under the Securities
Act. Parent and the Company shall promptly furnish to the other party all
information concerning it and its stockholders that may be required or
reasonably requested in connection with any action contemplated by this
Section 5.1. If any event relating to the Company or Parent occurs, or if
the Company or Parent becomes aware of any information, that should be
disclosed in an amendment or supplement to the Form S-4 Registration
Statement or the Prospectus/Proxy Statement, then the Company or Parent, as
the case may be, shall promptly inform the other party thereof and shall
cooperate with such party in filing such amendment or supplement with the SEC
and, if appropriate, in mailing such amendment or supplement to the
stockholders of the Company and Parent.
(b) Prior to the Effective Time, Parent shall use all
reasonable efforts to obtain all regulatory approvals needed to ensure that
the Parent Common Stock to be issued in the Merger will be registered or
qualified under the securities law of every jurisdiction of the United States
in which any registered holder of Company Common Stock has an address of
record on the record date for determining the stockholders entitled to notice
of and to vote at the Company Stockholders' Meeting; PROVIDED, HOWEVER, that
Parent shall not be required (i) to qualify to do business as a foreign
corporation in any jurisdiction in which it is not now qualified or (ii) to
file a general consent to service of process in any jurisdiction.
5.2 COMPANY STOCKHOLDERS' MEETING.
(a) The Company shall take all action necessary under all
applicable Legal Requirements to call, give notice of, convene and duly hold
a meeting of the holders of Company capital stock entitled to vote on the
Merger to consider, act upon and vote upon the adoption and approval of this
Agreement and the approval of the Merger and the transactions contemplated
hereby to the extent stockholder approval is required under applicable law or
by contractual arrangement (the "Company Stockholders' Meeting"). The
Company Stockholders' Meeting will be held as promptly as practicable after
the Form S-4 Registration Statement is declared effective under the
Securities Act. The Company shall ensure that the Company Stockholders'
Meeting is called, noticed, convened, held and conducted, and that all
proxies solicited in connection with the Company Stockholders' Meeting are
solicited, in compliance with all applicable Legal Requirements. The
Company's obligation to call, give notice of,
convene and hold the Company Stockholders' Meeting in accordance with this
Section 5.2(a) shall not be limited or otherwise affected by the
commencement, disclosure, announcement or submission of any Company Superior
Offer or other Company Acquisition Proposal, or by any withdrawal, amendment
or modification of the unanimous recommendation of the board of directors of
the Company with respect to the Merger.
(b) Subject to Section 5.2(c): (i) the board of directors of
the Company shall unanimously recommend that the Company's stockholders vote
in favor of and adopt and approve this Agreement and approve the Merger at
the Company Stockholders' Meeting; (ii) the Prospectus/Proxy Statement shall
include a statement to the effect that the board of directors of the Company
has unanimously recommended that the Company's stockholders vote in favor of
and adopt and approve this Agreement and approve the Merger at the Company
Stockholders' Meeting; and (iii) neither the board of directors of the
Company nor any committee thereof shall withdraw, amend or modify, or propose
or resolve to withdraw, amend or modify, in a manner adverse to Parent, the
unanimous recommendation of the board of directors of the Company that the
Company's stockholders vote in favor of and adopt and approve this Agreement
and approve the Merger. For the purposes of this Agreement, said unanimous
recommendation of the board of directors of the Company shall be deemed to
have been modified in a manner adverse to Parent if said recommendation shall
no longer be unanimous.
(c) Nothing in Section 5.2(b) shall prevent the board of
directors of the Company from withdrawing, amending or modifying its
recommendation in favor of the Merger at any time prior to the adoption and
approval of this Agreement by the Required Company Stockholder Vote if (i) a
Company Superior Offer is made to the Company and is not withdrawn, (ii)
neither the Company nor any of its Representatives shall have violated any of
the restrictions set forth in Section 4.3, (iii) the board of directors of
the Company concludes in good faith, based upon the advice of its outside
counsel, that the failure to withdraw, amend or modify such unanimous
recommendation would reasonably be likely to constitute a breach of the board
of directors' fiduciary obligations to the Company's stockholders under
applicable law. Nothing contained in Section 4.3 or this Section 5.2 shall
limit the Company's obligation to call, give notice of, convene and hold the
Company Stockholders' Meeting (regardless of whether the unanimous
recommendation of the board of directors of the Company shall have been
withdrawn, amended or modified) provided that nothing contained in this
Section 5.2 shall require the Company to call, give notice of, convene or
hold the Company Stockholders' Meeting in the event this Agreement is
terminated pursuant to Section 8.1.
5.3 PARENT SHAREHOLDERS' MEETING.
(a) Parent shall take all action necessary under all
applicable Legal Requirements to call, give notice of, convene and hold a
meeting of the holders of Parent Common Stock (the "Parent Shareholders'
Meeting") to consider, act upon and vote upon (i) the adoption and approval
of this Agreement and the approval of the Merger, (ii) the amendment and
restatement of Parent's Articles of Incorporation as provided in Section 1.4,
(iii) an amendment of Parent's Bylaws to increase the authorized number of
directors of Parent to not less than four (4) nor more than nine (9), (iv) an
increase of the number of shares reserved for issuance under Parent's 1992
Stock Option Plan and 1993 Non-Employee Directors' Equity Incentive Plan to
7,500,000 and 750,000, respectively, and (v) the other matters contemplated
by this Agreement (collectively, the "Parent Proposals"). The Parent
Shareholders' Meeting will be held as promptly as practicable after the Form
S-4 Registration Statement is declared effective under the Securities Act.
The Parent shall ensure that the Parent Shareholders' Meeting is called,
noticed, convened, held and conducted, and that all proxies solicited in
connection with the Parent Shareholders' Meeting are solicited, in compliance
with all applicable Legal Requirements. Parent's obligation to call, give
notice of, convene and hold the Parent Shareholders' Meeting in accordance
with this Section 5.3(a) shall not be limited or otherwise affected by the
commencement, disclosure, announcement or submission of any Parent Superior
Offer or other Parent Acquisition Proposal, or by any withdrawal, amendment
or modification of the unanimous recommendation of the board of directors of
the Parent with respect to the Merger.
(b) Subject to Section 5.3(c): (i) the board of directors of
Parent shall unanimously recommend that Parent's shareholders vote in favor of
and adopt and approve this Agreement and approve the Merger and the other
matters contemplated by this Agreement, including, but not limited to, the
Parent Proposals at the Parent Shareholders' Meeting; (ii) the Prospectus/Proxy
Statement shall include a statement to the effect that the board of directors of
the Parent has unanimously recommended that the Parent's shareholders vote in
favor of and adopt and approve this Agreement and approve the Merger and the
Parent Proposals at the Parent Shareholders' Meeting; and (iii) neither the
board of directors of the Parent nor any committee thereof shall withdraw, amend
or modify, or propose or resolve to withdraw, amend or modify, in a manner
adverse to Parent, the unanimous recommendation of the board of directors of the
Parent that the Parent's shareholders vote in favor of and adopt and approve
this Agreement and approve the Merger and the Parent Proposals. For the
purposes of this Agreement, said unanimous recommendation shall be deemed to
have been modified in a manner adverse to the Company if said recommendation
shall no longer be unanimous.
(c) Nothing in Section 5.3(b) shall prevent the board of
directors of Parent from withdrawing, amending or modifying its recommendation
in favor of the Merger at any time prior to the adoption and approval of this
Agreement by the Required Parent Shareholder Vote if (i) a Parent Superior Offer
is made to the Parent and is not withdrawn, (ii) neither Parent nor any of its
Representatives shall have violated any of the restrictions set forth in Section
4.6, (iii) the board of directors of the Parent concludes in good faith, based
upon the advice of its outside counsel, that the failure to withdraw, amend or
modify such unanimous recommendation would reasonably be likely to constitute a
breach of the board of directors' fiduciary obligations to Parent's shareholders
under applicable law. Nothing contained in Section 4.6 or this Section 5.3
shall limit Parent's obligation to call, give notice of, convene and hold the
Parent Shareholders' Meeting (regardless of whether the unanimous recommendation
of the board of directors of Parent shall have been withdrawn, amended or
modified) provided that nothing contained in this Section 5.3 shall require
Parent to call, give notice of, convene or hold the Parent Shareholders' Meeting
in the event this Agreement is terminated pursuant to Section 8.1.
5.4 REGULATORY APPROVALS. Each party shall use all reasonable
efforts to file, as promptly as practicable after the date of this Agreement,
all notices, reports and other documents required to be filed by such party with
any Governmental Body with respect to the Merger and the other transactions
contemplated by this Agreement, and to submit promptly any
additional information requested by any such Governmental Body. The Company
and Parent shall respond as promptly as practicable to any inquiries or
requests received from any state attorney general or other Governmental Body
in connection with antitrust or related matters. Each of the Company and
Parent shall (1) give the other party prompt notice of the commencement of
any Legal Proceeding by or before any Governmental Body with respect to the
Merger or any of the other transactions contemplated by this Agreement, (2)
keep the other party informed as to the status of any such Legal Proceeding,
and (3) promptly inform the other party of any communication to or from any
Governmental Body regarding the Merger. The Company and Parent will consult
and cooperate with one another, and will consider in good faith the views of
one another, in connection with any analysis, appearance, presentation,
memorandum, brief, argument, opinion or proposal made or submitted in
connection with any Legal Proceeding under or relating to the any federal or
state antitrust or fair trade law. In addition, except as may be prohibited
by any Governmental Body or by any Legal Requirement, in connection with any
Legal Proceeding under or relating to any federal or state antitrust or fair
trade law or any other similar Legal Proceeding, each of the Company and
Parent will permit authorized Representatives of the other party to be
present at each meeting or conference relating to any such Legal Proceeding
and to have access to and be consulted in connection with any document,
opinion or proposal made or submitted to any Governmental Body in connection
with any such Legal Proceeding.
5.5 STOCK OPTIONS.
(a) Parent shall file with the SEC, within 30 days after the
date on which the Merger becomes effective, a registration statement on Form
S-8 relating to the shares of Parent Common Stock issuable with respect to
the Company Options assumed by Parent in accordance with Section 1.5(e).
(b) The Company shall take all action that may be necessary
(under the plans pursuant to which Company Options are outstanding and
otherwise) to effectuate the provisions of Section 1.5(e) and this Section
5.5 and to ensure that, from and after the Effective Time, holders of Company
Options have no rights with respect thereto other than those specifically
provided in Section 1.5(e).
5.6 EMPLOYEE BENEFITS. Parent shall, and shall cause the
Surviving Corporation to, from and after the Effective Time, (i) comply with
the health, vacation and other employee benefit plans of the Company and any
Company Subsidiary in accordance with their terms, (ii) provide employees of
the Company and any Company Subsidiary prior to the Effective Time who remain
as employees of the Surviving Corporation (or any subsidiary thereof) or
Parent with employee benefit plans no less favorable in the aggregate than
those provided to similarly situated employees of Parent, (iii) provide
employees of the Company and any Company Subsidiary prior to the Effective
Time who remain as employees of the Surviving Corporation or Parent credit
for years of service with the Company or any Company Subsidiary prior to the
Effective Time for (A) the purpose of eligibility and vesting but not benefit
accrual under the Parent's health, pension, vacation and other employee
benefit plans, and (B) any and all pre-existing condition limitations and
eligibility waiting periods under health and other employee benefit plans of
Parent, and (iv) cause to be credited to any deductible out-of-pocket expense
under any health and other employee benefit plans of Parent any deductibles
or out-of-
pocket expenses incurred by employees of the Company and their beneficiaries
and dependents during the portion of the calendar year prior to their
participation in the health and other employee benefit plans of Parent.
Parent shall, and shall cause the Surviving Corporation to, honor in
accordance with their terms, all health, pension, vacation and other employee
benefit plans of the Company and any Company Subsidiary (subject to
compliance and conformity with employee benefit plans of Parent), vested or
accrued benefit obligations to, and contractual rights of, current and former
employees of the Company and the Company Subsidiaries.
5.7 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) All rights to indemnification existing in favor of those
Persons who are directors and officers of the Company as of the date of this
Agreement (the "Indemnified Persons") for acts and omissions occurring prior
to the Effective Time, as provided in the Company's Bylaws (as in effect as
of the date of this Agreement) and as provided in the indemnification
agreements between the Company and said Indemnified Persons (as in effect as
of the date of this Agreement), shall survive the Merger and shall be
observed by the Surviving Corporation to the fullest extent available under
Delaware law for a period of six years from the Effective Time.
(b) From the Effective Time until the fifth anniversary of
the Effective Time, the Surviving Corporation shall maintain in effect, for
the benefit of the Indemnified Persons with respect to acts or omissions
occurring prior to the Effective Time, the existing policy of directors' and
officers' liability insurance maintained by the Company as of the date of
this Agreement (the "Existing Policy"); PROVIDED, HOWEVER, that (i) the
Surviving Corporation may substitute for the Existing Policy a policy or
policies of comparable coverage, and (ii) the Surviving Corporation shall not
be required to pay an annual premium for the Existing Policy (or for any
substitute policies) in excess of 200% of the current premium. In the event
any future annual premium for the Existing Policy (or any substitute
policies) exceeds such limit, the Surviving Corporation shall reduce the
amount of coverage of the Existing Policy (or any substitute policies) to the
amount of coverage that can be obtained for a premium that exceeds such
limits.
5.8 ADDITIONAL AGREEMENTS. Parent and the Company shall use all
reasonable efforts to take, or cause to be taken, all actions necessary to
effectuate the Merger and make effective the other transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, each
party to this Agreement (i) shall make all filings (if any) and give all
notices (if any) required to be made and given by such party in connection
with the Merger and the other transactions contemplated by this Agreement,
(ii) shall use all reasonable efforts to obtain each Consent (if any)
required to be obtained (pursuant to any applicable Legal Requirement or
Contract, or otherwise) by such party in connection with the Merger or any of
the other transactions contemplated by this Agreement, and (iii) shall use
all reasonable efforts to lift any restraint, injunction or other legal bar
to the Merger. Parent and the Company shall promptly deliver to the other
party a copy of each such filing made, each such notice given and each such
Consent obtained by the Parent or Company, as the case may be, during the
Pre-Closing Period.
5.9 DISCLOSURE. Parent and the Company shall consult with each
other before issuing any press release or otherwise making any public
statement with respect to the Merger or any of the other transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, neither Parent nor the Company shall, and neither shall permit any
Subsidiary or Representative to, make any disclosure regarding the Merger or
any of the other transactions contemplated by this Agreement unless (a) the
other party shall have approved such disclosure or (b) the disclosing party
shall have been advised in writing by its outside legal counsel that such
disclosure is required by applicable law.
5.10 AFFILIATE AGREEMENTS. The Company shall cause each Person who
is or becomes (or may be deemed to be) an "affiliate" (as that term is used
in Rule 145 under the Securities Act) of the Company to execute and deliver
to Parent, prior to the date of the mailing of the Prospectus/Proxy Statement
to the Company's stockholders, an Affiliate Agreement in the form of Exhibit
F.
5.11 TAX MATTERS. At or prior to the filing of the Form S-4
Registration Statement, the Company and Parent shall execute and deliver to
Xxxxxx Godward LLP and to Xxxxxx & Xxxxxxx tax representation letters in
customary form. Parent, Merger Sub and the Company shall each confirm to
Xxxxxx Godward LLP and to Xxxxxx & Xxxxxxx the accuracy and completeness as
of the Effective Time of the tax representation letters delivered pursuant to
the immediately preceding sentence. Parent and the Company shall use all
reasonable efforts prior to the Effective Time to cause the Merger to qualify
as a tax free reorganization under Section 368(a)(1) of the Code. Following
delivery of the tax representations letters pursuant to the first sentence of
this Section 5.11, each of Parent and the Company shall use its reasonable
efforts to cause Xxxxxx Godward LLP and Xxxxxx & Xxxxxxx, respectively, to
deliver to it a tax opinion satisfying the requirements of Item 601 of
Regulation S-K promulgated under the Securities Act. In rendering such
opinions, each of such counsel shall be entitled to rely on the tax
representation letters referred to in this Section 5.11.
5.12 LISTING. Parent shall use all reasonable efforts to cause the
shares of Parent Common Stock being issued in the Merger to be approved for
listing (subject to notice of issuance) on AMEX.
5.13 CERTAIN PARENT REGULATORY MATTERS.
(a) Parent will by August 31, 1999 take all steps necessary
to complete Parent's Xxx'x Summit, Kansas manufacturing facility for Sildaflo
and to validate the facility, equipment and cleaning methods in material
compliance with "current good manufacturing practices" (cGMPs), as defined in
Parts 210 and 211 of Title 21 of the Code of Federal Regulations (1998), and
any guidance documents issued by the agency that purport to interpret these
regulations, and in accordance with any requirement set forth in the approved
new drug application (NDA) for Sildaflo. Parent will consult with the
Company and its advisors on a regular basis regarding the foregoing
manufacturing facility and, if requested by the Company, will engage a drug
GMP consultant of the Company's choice at the Company's expense to evaluate
the facility for compliance with federal, state and local drug manufacturing
standards. Any request by the Company or any consultant of the Company that
results in any delay shall cause the August 31 date to be extended by the
length of the delay.
(b) Parent will have the manufacturing processes for Sildaflo
and the related analytical methods validated by November 30, 1999 and will
file with the FDA all necessary application(s) for approvals from the FDA to
manufacture, test and label Sildaflo by that date. Parent will consult with
the Company and its advisors on a regular basis regarding such applications
and approvals and will permit the Company's FDA counsel to review and comment
on any and all FDA applications prior to submitting them to the FDA. The
Company acknowledges that on that date, Parent will have only three (3)
months stability data on Sildaflo.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions:
6.1 ACCURACY OF REPRESENTATIONS.
(a) Without limiting the effect or independence of the
condition set forth in Section 6.1(b), the representations and warranties of
the Company contained in this Agreement shall have been accurate in all
respects as of the date of this Agreement (except to the extent such
representations and warranties which are expressly stated to be made as of an
earlier date, which shall be true and correct in all respects as of such
date), it being understood that for the purposes of determining the accuracy
of such representations and warranties each of the following shall be
disregarded: (i) any "Material Adverse Effect" qualification or any other
materiality qualifications contained in such representations and warranties,
(ii) any inaccuracy that does not, together will all other inaccuracies, have
a Company Material Adverse Effect, (iii) any inaccuracy that results from
general business or economic conditions, (iv) any inaccuracy that results
from conditions generally affecting the industry in which the Company or the
Company's Subsidiaries competes, (v) any inaccuracy that results from the
announcement or pendency of the Merger or any of the transactions
contemplated hereby, and (vi) any inaccuracy that results from or relates to
the taking of any action contemplated by this Agreement.
(b) Without limiting the effect or independence of the
condition set forth in Section 6.1(a), the representations and warranties of
the Company contained in this Agreement (except to the extent such
representations and warranties which are expressly stated to be made as of an
earlier date, which shall be true and correct in all respects as of such
date) shall be accurate in all respects as of the Closing Date, it being
understood that for the purposes of determining the accuracy of such
representations and warranties each of the following shall be disregarded:
(i) any "Material Adverse Effect" qualification or any other materiality
qualifications contained in such representations and warranties, (ii) any
inaccuracy that does not, together with all other inaccuracies, have a
Company Material Adverse Effect, (iii) any inaccuracy that results from
general business or economic conditions, (iv) any inaccuracy that results
from conditions generally affecting the industry in which the Company or the
Company's Subsidiaries competes, (v) any inaccuracy that results from the
announcement or pendency of the Merger or any of the transactions
contemplated hereby, and (vi) any inaccuracy that results from the taking of
any action contemplated by this Agreement.
6.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that
the Company is required to comply with or to perform at or prior to the
Closing shall have been complied with and performed, except where the failure
to perform such covenants or obligations would not have a Material Adverse
Effect on the Company or Parent.
6.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order shall have been issued by
the SEC with respect to the Form S-4 Registration Statement.
6.4 STOCKHOLDER APPROVAL. This Agreement and the Merger shall
have been duly adopted and approved, and the Merger shall have been duly
approved, by the Required Company Stockholder Vote and by the Required Parent
Shareholder Vote and the Parent Proposals shall have been approved as
required by applicable law.
6.5 CONSENTS. All Consents required to be obtained by the Company
that are specifically set forth on Exhibit G attached hereto shall have been
obtained and shall be in full force and effect.
6.6 AGREEMENTS AND DOCUMENTS. Parent shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) an employment agreement in substantially the form
attached hereto as Exhibit H which shall have been executed and delivered by
Parent and Xxxxxxx X. Xxxxxxxxx, and such agreement shall become effective as
of the Closing Date;
(b) a separation and consulting agreement in substantially
the form attached hereto as Exhibit I-1 which shall have been executed and
delivered by Parent and Xxxx X. Xxxxxxxx and such agreement shall become
effective as of the Closing Date, and an executive severance benefits
agreement shall have been executed and delivered by Parent and Xx. Xxxxxxxx
in substantially the form attached hereto as Exhibit I-2 (or a similar
agreement which
provides Xx. Xxxxxxxx with an equivalent economic benefit as reflected
therein) and such agreement shall become effective as of or prior to the
Closing Date;
(c) a legal opinion of Xxxxxx Godward LLP dated as of the
Closing Date and addressed to Parent, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368 of the Code (it
being understood that, in rendering such opinion, Xxxxxx Godward LLP may rely
upon the tax representation letters referred to in Section 5.11); PROVIDED,
HOWEVER, that if Xxxxxx Godward LLP does not render such opinion or withdraws or
modifies such opinion, this condition shall nonetheless be deemed satisfied if
Xxxxxx & Xxxxxxx, counsel to the Company, renders such opinion to Parent.
(d) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that the conditions set forth in Sections 6.1, 6.2,
6.4, 6.5 and 6.7, have been duly satisfied; and
(e) except as set forth on Exhibit B, the written resignations
of all officers and directors of the Company, effective as of the Effective
Time.
6.7 COMPANY RIGHTS PLAN. All necessary actions shall have been taken
to extinguish and cancel all outstanding Rights under the Company Rights Plan or
render such Company Rights Plan inapplicable to the Merger and the other
transactions contemplated by this Agreement.
6.8 DIRECTORS AND OFFICERS. All of the persons listed in Exhibit B
shall have been duly appointed as directors and officers of Parent and Merger
Sub, as applicable.
6.9 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
AMEX.
6.10 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement applicable to the Merger
that makes consummation of the Merger illegal.
6.11 NO GOVERNMENTAL LITIGATION. There shall not be pending or
threatened any Legal Proceeding in which a Governmental Body is or is threatened
to become a party or is otherwise involved, and neither Parent nor the Company
shall have received any communication from any Governmental Body in which such
Governmental Body indicates the possibility of commencing any Legal Proceeding
or taking any other action: (a) challenging or seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions contemplated by
this Agreement; (b) relating to the Merger and seeking to obtain from Parent or
any of its Subsidiaries, or the Company or any of its Subsidiaries, any damages
or other relief that may be material to Parent and the Company, taken as a
whole, following the Merger; (c) seeking to prohibit or limit in any material
respect Parent's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Company; or (d) which
would materially and adversely affect the right of Parent or the Company to own
the assets or operate the business of the Company following the Merger.
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY
The obligation of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS.
(a) Without limiting the effect or independence of the
condition set forth in Section 7.1(b), the representations and warranties of
Parent and Merger Sub contained in this Agreement shall have been accurate in
all respects as of the date of this Agreement (except to the extent such
representations and warranties which are expressly stated to be made as of an
earlier date, which shall be true and correct in all respects as of such
date), it being understood that for the purposes of determining the accuracy
of such representations and warranties each of the following shall be
disregarded: (i) any "Material Adverse Effect" qualification or any other
materiality qualifications contained in such representations and warranties,
(ii) any inaccuracy that does not, together will all other inaccuracies, have
a Parent Material Adverse Effect, (iii) any inaccuracy that results from
general business or economic conditions, (iv) any inaccuracy that results
from conditions generally affecting the industry in which Parent or Parent's
Subsidiaries competes, (v) any inaccuracy that results from the announcement
or pendency of the Merger or any of the transactions contemplated hereby, and
(vi) any inaccuracy that results from or relates to the taking of any action
contemplated by this Agreement.
(b) Without limiting the effect or independence of the
condition set forth in Section 7.1(a), the representations and warranties of
Parent and Merger Sub contained in this Agreement (except to the extent such
representations and warranties which are expressly stated to be made as of an
earlier date, which shall be true and correct in all respects as of such
date) shall be accurate in all respects as of the Closing Date, it being
understood that for the purposes of determining the accuracy of such
representations and warranties each of the following shall be disregarded:
(i) any "Material Adverse Effect" qualification or any other materiality
qualifications contained in such representations and warranties, (ii) any
inaccuracy that does not, together with all other inaccuracies, have a Parent
Material Adverse Effect, (iii) any inaccuracy that results from general
business or economic conditions, (iv) any inaccuracy that results from
conditions generally affecting the industry in which Parent or Parent's
Subsidiaries competes, (v) any inaccuracy that results from the announcement
or pendency of the Merger or any of the transactions contemplated hereby, and
(vi) any inaccuracy that results from the taking of any action contemplated
by this Agreement.
7.2 PERFORMANCE OF COVENANTS. All of the covenants and
obligations that Parent and Merger Sub are required to comply with or to
perform at or prior to the Closing shall have been complied with and
performed, except where the failure to perform such covenants or obligations
would not have a Material Adverse Effect on the Company or Parent.
7.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order shall have been issued by
the SEC with respect to the Form S-4 Registration Statement.
7.4 STOCKHOLDER APPROVAL. This Agreement and the Merger shall
have been duly adopted and approved, and the Merger shall have been duly
approved, by the Required Company Stockholder Vote and by the Required Parent
Shareholder Vote and the Parent Proposals shall have been approved as
required by applicable law.
7.5 CONSENTS. All Consents required to be obtained by Parent that
are specifically set forth on Exhibit J attached hereto shall have been
obtained and shall be in full force and effect.
7.6 AGREEMENTS AND DOCUMENTS. Parent and the Company shall have
received the following agreements and documents, each of which shall be in
full force and effect:
(a) an employment agreement in substantially the form
attached hereto as Exhibit H which shall have been executed and delivered by
Parent and Xxxxxxx X. Xxxxxxxxx, and such agreement shall become effective as
of the Closing Date;
(b) a separation and consulting agreement in substantially
the form attached hereto as Exhibit I-1 which shall have been executed and
delivered by Parent and Xxxx X. Xxxxxxxx and such agreement shall become
effective as of the Closing Date, and an executive severance benefits
agreement shall have been executed and delivered by Parent and Xx. Xxxxxxxx
in substantially the form attached hereto as Exhibit I-2 (or a similar
agreement which provides Xx. Xxxxxxxx with an equivalent economic benefit as
reflected therein) and such agreement shall become effective as of or prior
to the Closing Date;
(c) a legal opinion of Xxxxxx & Xxxxxxx, dated as of the
Closing Date, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368 of the Code (it being understood that, in
rendering such opinion, Xxxxxx & Xxxxxxx may rely upon the tax representation
letters referred to in Section 5.11); PROVIDED, HOWEVER, that if Xxxxxx &
Xxxxxxx does not render such opinion or withdraws or modifies such opinion,
this condition shall nonetheless be deemed satisfied if Xxxxxx Godward LLP,
counsel to Parent, renders such opinion to the Company; and
(d) a certificate executed on behalf of Parent by an
executive officer of Parent, confirming that conditions set forth in Sections
7.1, 7.2, 7.4, 7.5, 7.7 and 7.8 and 7.9 have been duly satisfied.
7.7 LISTING. The shares of Parent Common Stock to be issued in
the Merger shall have been approved for listing (subject to notice of
issuance) on AMEX.
7.8 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
by the Company shall have been issued by any court of competent jurisdiction
and remain in effect, and there shall not be any Legal Requirement enacted or
deemed applicable to the Merger that makes consummation of the Merger by the
Company illegal.
7.9 NO GOVERNMENTAL LITIGATION. There shall not be pending or
threatened any Legal Proceeding in which a Governmental Body is or is
threatened to become a party or is otherwise involved, and neither Parent nor
the Company shall have received any communication
from any Governmental Body in which such Governmental Body indicates the
possibility of commencing any Legal Proceeding or taking any other action:
(a) challenging or seeking to restrain or prohibit the consummation of the
Merger or any of the other transactions contemplated by this Agreement; (b)
relating to the Merger and seeking to obtain from the Company or any of its
Subsidiaries, or Parent or any of its Subsidiaries, any damages or other
relief that may be material to the Company and Parent, taken as a whole,
following the Merger; (c) seeking to prohibit or limit in any material
respect Parent's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Company;
or (d) which would materially and adversely affect the right of the Company
or Parent to own the assets or operate the business of Parent following the
Merger.
8. TERMINATION
8.1 TERMINATION. This Agreement may be terminated prior to the
Effective Time (whether before or after approval of the Merger by the Required
Company Stockholder Vote and/or the Required Parent Shareholder Vote):
(a) by mutual written consent of Parent and the Company duly
authorized by the boards of directors of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not
have been consummated by December 31, 1999; provided that the right to
terminate this Agreement under this Section 8.1(b) shall not be available to
any party if the failure to consummate the Merger is the result of willful
breach of this Agreement by the party seeking to terminate this Agreement;
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other action,
having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger;
(d) by either Parent or the Company if (i) the Parent
Shareholders' Meeting (including any adjournments thereof) shall have been
held and completed and Parent's shareholders shall have taken a final vote on
a proposal to approve and adopt this Agreement and approve the Merger and
approve the Amended Articles, and (ii) this Agreement, the Merger and the
Amended Articles shall not have been approved by the Required Parent
Shareholder Vote; PROVIDED HOWEVER, that Parent shall not be permitted to
terminate this Agreement pursuant to this Section 8.1(d) if the failure of
Parent's shareholders to approve this Agreement, the Merger or the Amended
Articles is attributable to a failure on the part of Parent to perform any
material obligation required to have been performed by Parent under this
Agreement; PROVIDED FURTHER HOWEVER, that Parent shall not be permitted to
terminate this Agreement pursuant to this Section 8.1(d) unless Parent shall
have paid to the Company any fee required to be paid to the Company pursuant
to Section 8.3(b)(i);
(e) by either Parent or the Company if (i) the Company
Stockholders' Meeting (including any adjournments thereof) shall have been
held and completed and the Company's stockholders shall have taken a final
vote on a proposal to approve and adopt this Agreement and approve the
Merger, and (ii) this Agreement and the Merger shall not have been
approved by the Required Company Stockholder Vote; PROVIDED HOWEVER, that the
Company shall not be permitted to terminate this Agreement pursuant to this
Section 8.1(e) if the failure of the Company's stockholders to approve this
Agreement and the Merger is attributable to a failure on the part of the
Company to perform any material obligation required to have been performed by
the Company under this Agreement; PROVIDED FURTHER HOWEVER, that the Company
shall not be permitted to terminate this Agreement pursuant to this Section
8.1(e) unless the Company shall have paid to Parent any fee required to be
paid to Parent pursuant to Section 8.3(b)(ii);
(f) by Parent if the total Merger Shares (as determined under
Section 1.5(b)(iii)) would equal or exceed the total number of Parent
Outstanding Shares;
(g) by (i) Parent (at any time prior to the adoption and
approval of this Agreement and the Merger by the Required Company Stockholder
Vote) if a Company Triggering Event shall have occurred, or (ii) the Company
(at any time prior to the adoption and approval of this Agreement and the
Merger by the Required Parent Shareholder Vote) if a Parent Triggering Event
shall have occurred;
(h) by Parent if any of the Company's covenants contained in
this Agreement shall have been breached or if any of the Company's
representations and warranties contained in this Agreement shall have been
inaccurate or breached whereby such breach or inaccuracy (after taking into
account all such breaches and inaccuracies) shall have resulted in a Material
Adverse Effect on the Company; PROVIDED, HOWEVER, that Parent may not
terminate this Agreement under this Section 8.1(h) on account of any such
breach or inaccuracy that is curable by the Company unless the Company fails
to cure such inaccuracy or breach within 15 days after receiving written
notice from Parent of such inaccuracy or breach;
(i) by the Company if any of Parent's covenants contained in
this Agreement shall have been breached or if any of Parent's representations
and warranties contained in this Agreement shall have been inaccurate or
breached whereby such breach or inaccuracy (after taking into account all
such breaches and inaccuracies) shall have resulted in a Material Adverse
Effect on Parent; PROVIDED, HOWEVER, that the Company may not terminate this
Agreement under this Section 8.1(i) on account of any such breach or
inaccuracy that is curable by Parent unless Parent fails to cure such
inaccuracy or breach within 15 days after receiving written notice from the
Company of such inaccuracy or breach.
8.2 EFFECT OF TERMINATION. The termination of this Agreement
shall be effected by the delivery by the party terminating this Agreement to
each other party of a written notice of such termination, specifying the
basis for such termination and the Section of this Agreement pursuant to
which such termination is being effected. In the event this Agreement is
terminated pursuant to Section 8.1, this Agreement shall be of no further
force or effect; PROVIDED, HOWEVER, that (i) this Section 8.2, Section 8.3
and Section 9 shall survive the termination of this Agreement and shall
remain in full force and effect, and (ii) the termination of this Agreement
shall not relieve any party from any liability for any inaccuracy in or
breach of any representation, warranty or covenant contained in this
Agreement.
8.3 EXPENSES; TERMINATION FEES.
(a) Except as set forth in this Section 8.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; PROVIDED, HOWEVER, that
(i) Parent and the Company shall share equally all fees and expenses, other
than attorneys' fees, incurred in connection with the filing, printing and
mailing of the Form S-4 Registration Statement and the Prospectus/Proxy
Statement and any amendments or supplements thereto.
(b) In consideration of the substantial time, expense and
forgoing other opportunities invested by the parties in connection with this
Agreement and the transactions contemplated by this Agreement,
(i) In the event this Agreement is terminated by
Parent or the Company pursuant to Section 8.1(d), by Parent pursuant to
Section 8.1(f) or by the Company pursuant to Section 8.1(g)(ii), then, in
either such case, Parent shall pay to the Company, in cash at the time
specified in the next sentence, a nonrefundable fee in the amount of
$1,000,000. In the case of termination of this Agreement by Parent pursuant
to Section 8.1(d), the fee referred to in the preceding sentence shall be
paid by Parent prior to such termination, and in the case of termination of
this Agreement by the Company pursuant to Section 8.1(d) or Section
8.1(g)(ii), or by Parent pursuant to Section 8.1(f), the fee referred to in
the preceding sentence shall be paid by Parent within two business days after
such termination.
(ii) In the event this Agreement is terminated by
Parent or the Company pursuant to Section 8.1(e) or by Parent pursuant to
Section 8.1(g)(i), then the Company shall pay to Parent, in cash at the time
specified in the next sentence, a nonrefundable fee in the amount of
$1,000,000. In the case of termination of this Agreement by the Company
pursuant to Section 8.1(e), the fee referred to in the preceding sentence
shall be paid by the Company prior to such termination, and in the case of
termination of this Agreement by Parent pursuant to Section 8.1(e) or Section
8.1(g)(i), the fee referred to in the preceding sentence shall be paid by the
Company within two business days after such termination.
9. MISCELLANEOUS PROVISIONS
9.1 AMENDMENT. This Agreement may be amended with the approval of
the respective boards of directors of the Company and Parent at any time
(whether before or after the adoption and approval of this Agreement and the
approval of the Merger by the stockholders of the Company); PROVIDED,
HOWEVER, that after any such adoption and approval of this Agreement and
approval of the Merger by the Company's stockholders, no amendment shall be
made which by law requires further approval of the stockholders of the
Company without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
9.2 WAIVER.
(a) No failure on the part of either party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the
part of either party in exercising
any power, right, privilege or remedy under this Agreement, shall operate as
a waiver of such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any
other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) Neither party shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is
given.
9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any
certificate delivered pursuant to this Agreement shall survive the Merger.
9.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the other
agreements referred to herein constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof and thereof. This
Agreement may be executed in several counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same
instrument.
9.5 APPLICABLE LAW; JURISDICTION. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. In any action between the parties
arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement: (a) each of the parties irrevocably and
unconditionally consents and submits to the exclusive jurisdiction and venue
of the state and federal courts located in the State of California; (b) each
of the parties irrevocably waives the right to trial by jury; and (c) each of
the parties irrevocably consents to service of process by first class
certified mail, return receipt requested, postage prepaid, to the address at
which such party is to receive notice in accordance with Section 9.9.
9.6 DISCLOSURE SCHEDULES.
(a) The Company shall prepare and deliver to Parent
concurrently herewith a Company Disclosure Schedule which has been duly
executed on behalf of the Company by its President and which contains
exceptions to the Company's representations and warranties made in Section 2
of this Agreement. The Company Disclosure Schedule shall be arranged in
separate parts corresponding to the numbered and lettered sections contained
in Section 2, and the information disclosed in any numbered or lettered part
shall be deemed to relate to and to qualify the representations or warranties
set forth in the corresponding numbered or lettered section in Section 2.
(b) Parent shall prepare and deliver to the Company
concurrently herewith a Parent Disclosure Schedule which has been duly
executed on behalf of Parent by its President and which contains exceptions
to Parent's representations and warranties made in Section 3 of this
Agreement. The Parent Disclosure Schedule shall be arranged in separate
parts
corresponding to the numbered and lettered sections contained in Section 3,
and the information disclosed in any numbered or lettered part shall be
deemed to relate to and to qualify the representations or warranties set
forth in the corresponding numbered or lettered section in Section 3.
(c) The Company Disclosure Schedule and the Parent Disclosure
Schedule and the information, descriptions and disclosures contained therein
will be deemed to be automatically disclosed in any other part of the Company
Disclosure Schedule or the Parent Disclosure Schedule, as applicable, where a
cross reference to such part is made or where the relevance of such
information, descriptions or disclosures to such part is reasonably apparent.
9.7 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.
9.8 ASSIGNABILITY. This Agreement shall be binding upon, and
shall be enforceable by and inure solely to the benefit of, the parties
hereto and their respective successors and assigns; PROVIDED, HOWEVER, that
neither this Agreement nor any of Parent's rights or the Company's rights
hereunder may be assigned by Parent or the Company, as applicable, without
the prior written consent of the Company or Parent, as applicable, and any
attempted assignment of this Agreement or any of such rights by the Company
without such consent shall be void and of no effect. Nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
any right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
9.9 NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in
writing and shall be deemed properly delivered, given and received (a) when
delivered by hand, or (b) after sent by registered mail or, by courier or
express delivery service or by facsimile to the address or facsimile
telephone number set forth beneath the name of such party below (or to such
other address or facsimile telephone number as such party shall have
specified in a written notice given to the other parties hereto):
if to Parent:
Cypros Pharmaceutical Corporation
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
FAX: (000) 000-0000
Attention: Chief Financial Officer
if to Merger Sub:
Cypros Acquisition Corporation
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
FAX: (000) 000-0000
Attention: Secretary
if to the Company:
RiboGene, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
FAX: (000) 000-0000
Attention: Chief Executive Officer
9.10 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereunder are not affected
in any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated
hereunder be consummated as originally contemplated to the fullest extent
possible.
9.11 COOPERATION. Each of the Company and Parent agrees to
cooperate fully with the other and to execute and deliver such further
documents, certificates, agreements and instruments and to take such other
actions as may be reasonably requested by the other party to evidence or
reflect the transactions contemplated by this Agreement and to carry out the
intent and purposes of this Agreement.
9.12 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party
shall not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections," "Exhibits" and "Schedules" are intended to refer to
Sections of this Agreement and Exhibits or Schedules to this Agreement.
(e) The bold-faced headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
CYPROS PHARMACEUTICAL CORPORATION,
a California corporation
By: /s/ Xxxx X. Xxxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxxx
----------------------------
Title: Chief Executive Officer
----------------------------
CYPROS ACQUISITION CORPORATION,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
----------------------------
Title: Chief Financial Officer and Secretary
----------------------------
RIBOGENE, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
----------------------------
Title: President and Chief Executive Officer
----------------------------
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Reorganization
to which this Exhibit A is attached, as it may be amended from time to time.
AMEX. "AMEX" shall mean the American Stock Exchange, Inc.
AMENDED ARTICLES. "Amended Articles" shall have the meaning ascribed
thereto in Section 1.4(a).
APPLICABLE REGULATORY REQUIREMENTS. "Applicable Regulatory Requirements"
shall have the meaning ascribed thereto in Section 2.20.
CCC. "CCC" shall mean the California Corporation Code.
CERTIFICATE OF MERGER. "Certificate of Merger" shall have the meaning
ascribed thereto in Section 1.3.
CLOSING; CLOSING DATE. "Closing" and "Closing Date" shall have the
meanings ascribed thereto in Section 1.3.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMPANY ACQUISITION PROPOSAL. "Company Acquisition Proposal" shall mean
any offer, proposal or inquiry (other than an offer or proposal by Parent)
contemplating or otherwise relating to any Company Acquisition Transaction.
COMPANY ACQUISITION TRANSACTION. "Company Acquisition Transaction" with
respect to the Company shall mean any transaction or series of transactions
involving:
(a) any merger, consolidation, amalgamation, share exchange, business
combination, issuance of securities, acquisition of securities, tender
offer, exchange offer or other similar transaction (i) in which the Company
or any Company Subsidiary is a constituent company or involving the capital
stock of the Company or any Company Subsidiary, (ii) in which a Person or
"group" (as defined in the Exchange Act and the rules promulgated
thereunder) of Persons directly or indirectly acquires the Company or any
Company Subsidiary or more than 20% of the Company's or any Company
Subsidiary's business or directly or indirectly acquires beneficial or
record ownership of securities representing, or exchangeable for or
convertible into, more than 20% of the outstanding securities of any class
of voting securities of the Company or any Company Subsidiary, or (iii) in
which the Company or any Company Subsidiary issues securities representing
more than 20% of the outstanding securities of any class of voting
securities of the Company or any Company Subsidiary;
(b) any sale, lease, exchange, transfer, license, acquisition or
disposition of more than 20% of the assets of the Company or any Company
Subsidiary or assets which generate more than 20% of the Company's revenue
or 20% of the revenue of any Company Subsidiary; or
(c) any liquidation or dissolution of the Company or any Company
Subsidiary;
PROVIDED, HOWEVER, that a Company Collaboration Agreement shall not be
deemed to be a Parent Acquisition Transaction.
COMPANY COLLABORATION AGREEMENT. "Company Collaboration Agreement"
shall mean any collaboration or other similar transaction with a
pharmaceutical or biotechnology company, to the extent such collaboration or
other similar transaction relates primarily to the licensing of technology
relating to the Company's drug discovery business.
COMPANY COMMON STOCK. "Company Common Stock" shall mean the Common
Stock, $0.01 par value per share, of the Company.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall mean
the Company Disclosure Schedule that has been prepared by the Company with
respect to the representations and warranties of the Company made in Section
2 in accordance with the requirements of Section 9.6(a) of the Agreement and
that has been delivered by the Company to Parent on the date of the Agreement
and signed by the President of the Company.
COMPANY LEASES. "Company Leases" shall have the meaning ascribed
thereto in Section 2.16.
COMPANY OPTIONS. "Company Options" shall have the meaning ascribed
thereto in Section 2.3(b).
COMPANY OUTSTANDING SHARES. "Company Outstanding Shares" shall have the
meaning ascribed thereto in Section 1.5(b)(i).
COMPANY PREFERRED STOCK. "Company Preferred Stock" shall mean the
Preferred Stock, $0.001 par value per share, of the Company.
COMPANY PROPRIETARY ASSETS. "Company Proprietary Assets" shall have the
meaning ascribed thereto in Section 2.7.
COMPANY RETURNS. "Company Returns" shall have the meaning ascribed
thereto in Section 2.11(a).
COMPANY RIGHTS PLAN. "Company Rights Plan" shall mean that certain
Rights Agreement dated as of July 1, 1999, by and between the Company and
American Stock Transfer & Trust Company as Rights Agent.
COMPANY SEC DOCUMENTS. "Company SEC Documents" shall have the meaning
ascribed thereto in Section 2.4(a).
COMPANY STOCKHOLDERS' MEETING. "Company Stockholders" Meeting shall
have the meaning ascribed thereto in Section 5.2.
COMPANY SUBSIDIARIES. "Company Subsidiaries" shall have the meaning
ascribed thereto n Section 2.1(a).
COMPANY SUPERIOR OFFER. "Company Superior Offer" shall mean an
unsolicited, bona fide written offer made by a third party relating to any
Company Acquisition Transaction on terms that the board of directors of the
Company determines, in its reasonable judgment, based upon the advice of its
financial advisor and upon consultation with its counsel, to be more
favorable to the Company's stockholders than the terms of the Merger;
PROVIDED, HOWEVER, that any such offer shall not be deemed to be a "Company
Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed (in a writing signed by a Person
that the board of directors of the Company reasonably believes has the
financial ability to meet such commitment) and the board of directors of the
Company does not reasonably believe that such financing is likely to be
obtained by such third party on a timely basis.
COMPANY TRIGGERING EVENT. A "Company Triggering Event" shall be deemed
to have occurred if: (i) the board of directors of the Company shall have
failed to unanimously recommend or shall for any reason have withdrawn or
shall have amended or modified in a manner adverse to Parent its unanimous
recommendation in favor of, the adoption and approval of the Agreement or the
approval of the Merger; (ii) the Company shall have failed to include in the
Prospectus/Proxy Statement the unanimous recommendation of the board of
directors of the Company in favor of the adoption and approval of the
Agreement and the approval of the Merger; (iii) the board of directors of the
Company fails to reaffirm its unanimous recommendation in favor of the
adoption and approval of the Agreement and the approval of the Merger within
ten business days after Parent requests in writing that such unanimous
recommendation be reaffirmed; (iv) the board of directors of the Company
shall have approved, endorsed or recommended any Company Acquisition
Transaction; (v) the Company shall have entered into any letter of intent or
similar document or any Contract relating to any Company Acquisition
Transaction; (vi) the Company shall have failed to hold the Company
Stockholders' Meeting as promptly as practicable after the Form S-4
Registration Statement is declared effective under the Securities Act; (vii)
a tender or exchange offer relating to securities of the Company shall have
been commenced and the Company shall not have sent to its securityholders,
within ten business days after the commencement of such tender or exchange
offer, a statement disclosing that the Company recommends rejection of such
tender or exchange offer; (viii) a Company Acquisition Transaction is
publicly announced, and the Company fails to issue a press release announcing
its opposition to such Company Acquisition Transaction within ten business
days after such Company Acquisition Transaction is announced; (ix) the
Company breaches or is deemed to have breached any of its obligations under
Section 4.3 of the Agreement, or (x) a Person or group (as defined in the
Exchange Act and the rules promulgated thereunder) shall have acquired more
than fifty percent (50%) of the Company's voting securities (excluding
Persons or groups that as of the date of this Agreement, hold more than
fifty percent (50%) of the Company's voting securities or that may be deemed
to have acquired such percentage upon execution of the Voting Agreements).
COMPANY UNAUDITED INTERIM BALANCE SHEET. "Company Unaudited Interim
Balance Sheet" shall have the meaning ascribed thereto in Section 2.4(c).
COMPANY WARRANTS. "Company Warrants" shall mean the outstanding
warrants to purchase Company Common Stock.
CONFIDENTIAL INFORMATION. "Confidential Information" shall have the
meanings ascribed thereto in Section 2.7(g) and in Section 3.7(g), as the
case may be.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental
Authorization) required by any party to be obtained under any Contract or
Legal Requirement in connection with the transactions contemplated by this
Agreement.
CONSTITUENT COMPONENT. "Constituent Component" shall have the meaning
ascribed thereto in Section 2.21.
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan
or legally binding commitment or undertaking of any nature.
DGCL. "DGCL" shall mean the Delaware General Corporation Law.
EFFECTIVE TIME. "Effective Time" shall have the meaning ascribed
thereto in Section 1.3.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on
the voting of any security, any restriction on the transfer of any security
or other asset, any restriction on the receipt of any income derived from any
asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any company
limited by shares, limited liability company or joint stock company), firm,
society or other enterprise, association, organization or entity.
ENVIRONMENTAL LAW. "Environmental Law" shall have the meaning ascribed
thereto in Section 2.17.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
ESPP. "ESPP" shall have the meaning ascribed thereto in Section
1.5(a)(i).
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
EXCHANGE AGENT. "Exchange Agent" shall have the meaning ascribed
thereto in Section 1.9(a).
EXCHANGE FUND. "Exchange Fund" shall have the meaning ascribed thereto
in Section 1.9(a).
EXCHANGE RATIO. "Exchange Ratio" shall have the meaning ascribed
thereto in Section 1.5(b)(ii).
EXISTING POLICY. "Existing Policy" shall have the meaning ascribed
thereto in Section 5.7(b).
FDA; FDA, ETC. "FDA" and FDA, etc." shall each have the meaning
ascribed thereto in Section 2.22(a).
FORM S-4 REGISTRATION STATEMENT. "Form S-4 Registration Statement"
shall mean the registration statement on Form S-4 to be filed with the SEC by
Parent pursuant to Section 5.1 in connection with issuance of Parent Common
Stock in the Merger, as said registration statement may be amended prior to
the time it is declared effective by the SEC.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, permission, variance,
clearance, registration, qualification or authorization issued, granted,
given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement; or (b) right under
any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal,
foreign or other government; or (c) governmental or quasi-governmental
authority of any nature (including any governmental division, department,
agency, commission, instrumentality, official, ministry, fund, foundation,
center, organization, unit, body or Entity and any court or other tribunal).
INDEMNIFIED PERSONS. "Indemnified Persons" shall have the meaning
ascribed thereto in Section 5.7.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry,
audit, examination or investigation commenced, brought, conducted or heard by
or before, or otherwise involving, any court or other Governmental Body or
any arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Body
(or under the authority of AMEX).
LIABILITIES. "Liabilities" or "Liability" shall mean any liability or
obligation of any kind or nature, secured or unsecured (whether absolute,
accrued, contingent or otherwise, and whether due or to become due).
MATERIAL ADVERSE EFFECT. "Material Adverse Effect" shall mean, with
respect to any Person, any event, circumstance, change or effect that is or
could reasonably be expected to be materially adverse to the business,
operations, properties, condition (financial or otherwise) or assets of such
Person and its subsidiaries taken as a whole. In no event shall any of the
following constitute a Material Adverse Effect: (i) a change in the trading
prices of either the Company's or Parent's equity securities between the date
hereof and the Effective Time, in and of itself; (ii) conditions, events,
circumstances, changes or effects generally affecting the industry in which
either the Company or Parent operates or arising from changes in general
business or economic conditions; (iii) conditions, events, circumstances,
changes or effects directly attributable to out-of-pocket fees and expenses
(including without limitation legal, accounting and financial consulting fees
and expenses) incurred in connection with the transactions contemplated by
this Agreement; (iv) any conditions, events, circumstances, changes or
effects resulting from any change in law or generally accepted accounting
principles, which affect generally entities such as Parent or the Company;
(v) any conditions, events, circumstances, changes or effects (including
without limitation, delays in customer orders, a reduction in sales, a
disruption in supplier, distributor or similar relationships or a loss of
employees) resulting from the announcement or pendency of any of the
transactions contemplated by this Agreement; or (vi) any conditions, events,
circumstances, changes or effects resulting from compliance by the Company or
Parent with, or the taking of any action contemplated by, the terms of this
Agreement.
MATERIAL COMPANY CONTRACT. "Material Company Contract" shall have the
meaning ascribed thereto in Section 2.8(a).
MATERIAL PARENT CONTRACT. "Material Parent Contract shall have the
meaning ascribed thereto in Section 3.8(a).
MATERIALS OF ENVIRONMENTAL CONCERN. "Materials of Environmental
Concern" shall have the meaning ascribed thereto in Section 2.17.
MERGER SHARES. "Merger Shares" shall have the meaning ascribed thereto
in Section 1.5(b)(iii).
NASDAQ. "Nasdaq" shall mean the Nasdaq Stock Market, Inc.
MERGER. "Merger" shall have the meaning ascribed thereto in Recital A
of this Agreement.
PARENT ACQUISITION PROPOSAL. "Parent Acquisition Proposal" shall mean
any offer, proposal or inquiry (other than an offer or proposal by the
Company) contemplating or otherwise relating to any Parent Acquisition
Transaction.
PARENT ACQUISITION TRANSACTION. "Parent Acquisition Transaction" with
respect to Parent shall mean any transaction or series of transactions
involving:
(a) any merger, consolidation, amalgamation, share exchange, business
combination, issuance of securities, acquisition of securities, tender
offer, exchange offer or other similar transaction (i) in which Parent or
any Parent Subsidiary is a constituent company or involving the capital
stock of Parent or any Parent Subsidiary, (ii) in which a Person or "group"
(as defined in the Exchange Act and the rules promulgated thereunder) of
Persons directly or indirectly acquires Parent or any Parent Subsidiary or
more than 20% of Parent's or any Parent Subsidiary's business or directly
or indirectly acquires beneficial or record ownership of securities
representing, or exchangeable for or convertible into, more than 20% of the
outstanding securities of any class of voting securities of Parent or any
Parent Subsidiary, or (iii) in which Parent or any Parent Subsidiary issues
securities representing more than 20% of the outstanding securities of any
class of voting securities of Parent or any Parent Subsidiary;
(b) any sale, lease, exchange, transfer, license, acquisition or
disposition of more than 20% of the assets of Parent or any Parent
Subsidiary or assets which generate more than 20% of Parent's revenue or
20% of the revenue of any Parent Subsidiary; or
(c) any liquidation or dissolution of Parent or any Parent
Subsidiary;
PROVIDED, HOWEVER, that a Parent Collaboration Agreement shall not be
deemed to be a Parent Acquisition Transaction.
PARENT COLLABORATION AGREEMENT. "Parent Collaboration Agreement" shall
mean any collaboration or other similar transaction with a pharmaceutical or
biotechnology company, to the extent such collaboration or other similar
transaction relates primarily to the licensing of technology relating to
Parent's drug discovery or drug development (pre-clinical or clinical)
business.
PARENT COMMON STOCK. "Parent Common Stock" shall mean the Common Stock,
no par value per share, of Parent.
PARENT DISCLOSURE SCHEDULE. "Parent Disclosure Schedule" shall mean the
Parent Disclosure Schedule that has been prepared by Parent with respect to
the representations and warranties of Parent made in Section 3 in accordance
with the requirements of Section 9.6(b) of the Agreement and that has been
delivered by the Parent to the Company on the date of the Agreement and
signed by the President of Parent.
PARENT LEASES. "Parent Leases" shall have the meaning ascribed thereto
in Section 3.16.
PARENT OPTION PLAN AMENDMENT. "Parent Option Plan Amendment" shall have
the meaning ascribed thereto in Section 4.5(b)(ii).
PARENT OPTIONS. "Parent Options" shall mean outstanding stock options
granted by Parent pursuant to Parent's stock option plans.
PARENT OUTSTANDING SHARES. "Parent Outstanding Shares" shall have the
meaning ascribed thereto in Section 1.5(b)(iv).
PARENT PREFERRED STOCK. "Parent Preferred Stock" shall mean the Series
A Preferred Stock, no par value per share of Parent.
PARENT PROPOSAL. "Parent Proposal" shall have the meaning ascribed
thereto in Section 5.3(a).
PARENT PROPRIETARY ASSETS. "Parent Proprietary Assets" shall have the
meaning ascribed thereto in Section 3.7(a).
PARENT RETURNS. "Parent Returns" shall have the meaning ascribed
thereto in Section 3.11(a).
PARENT SEC DOCUMENTS. "Parent SEC Documents shall have the meaning
ascribed thereto in Section 3.4(a).
PARENT SHAREHOLDERS' MEETING. "Parent Shareholders' Meeting" shall have
the meaning ascribed thereto in Section 5.3.
PARENT SUBSIDIARIES. "Parent Subsidiaries" shall have the meaning
ascribed thereto in Section 3.1.
PARENT SUPERIOR OFFER. "Parent Superior Offer" shall mean an
unsolicited, bona fide written offer made by a third party relating to any
Parent Acquisition Transaction on terms that the board of directors of Parent
determines, in its reasonable judgment, based upon the advice of its
financial advisor and upon consultation with its counsel, to be more
favorable to Parent's stockholders than the terms of the Merger; PROVIDED,
HOWEVER, that any such offer shall not be deemed to be a "Parent Superior
Offer" if (1) any financing required to consummate the transaction
contemplated by such offer is not committed (in a writing signed by a Person
that the board of directors of Parent reasonably believes has the financial
ability to meet such commitment) and the board of directors of Parent does
not reasonably believe that such financing is likely to be obtained by such
third party on a timely basis.
PARENT TRIGGERING EVENT. A "Parent Triggering Event" shall be deemed to
have occurred if: (i) the board of directors of Parent shall have failed to
unanimously recommend or shall for any reason have withdrawn or shall have
amended or modified in a manner adverse to Parent its unanimous
recommendation in favor of, the adoption and approval of the Agreement or the
approval of the Merger; (ii) Parent shall have failed to include in the
Prospectus/Proxy Statement the unanimous recommendation of the board of
directors of Parent in favor of the adoption and approval of the Agreement
and the approval of the Merger; (iii) the board of directors of Parent fails
to reaffirm its unanimous recommendation in favor of the adoption and
approval of the Agreement and the approval of the Merger within ten business
days after Parent requests in writing that such unanimous recommendation be
reaffirmed; (iv) the board of
directors of Parent shall have approved, endorsed or recommended any Parent
Acquisition Transaction; (v) Parent shall have entered into any letter of
intent or similar document or any Contract relating to any Parent Acquisition
Transaction; (vi) Parent shall have failed to hold Parent Shareholders'
Meeting as promptly as practicable after the Form S-4 Registration Statement
is declared effective under the Securities Act; (vii) a tender or exchange
offer relating to securities of Parent shall have been commenced and Parent
shall not have sent to its securityholders, within ten business days after
the commencement of such tender or exchange offer, a statement disclosing
that Parent recommends rejection of such tender or exchange offer; (viii) a
Parent Acquisition Transaction is publicly announced, and Parent fails to
issue a press release announcing its opposition to such Parent Acquisition
Transaction within ten business days after such Parent Acquisition
Transaction is announced; (ix) Parent breaches or is deemed to have breached
any of its obligations under Section 4.6 of the Agreement, or (x) a Person or
group (as defined in the Exchange Act and the rules promulgated thereunder)
shall have acquired more than fifty percent (50%) of Parent's voting
securities (excluding Persons or groups that as of the date of this
Agreement, hold more than fifty percent (50%) of Parent's voting securities
or that may be deemed to have acquired such percentage upon execution of the
Voting Agreements).
PARENT UNAUDITED INTERIM BALANCE SHEET. "Parent Unaudited Interim
Balance Sheet" shall have the meaning ascribed thereto in Section 3.4(c).
PARENT WARRANTS. "Parent Warrants" shall mean the outstanding warrants
to purchase Parent Common Stock.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PRE-CLOSING PERIOD. "Pre-Closing Period" shall have the meaning
ascribed thereto in Section 4.1.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system,
computer software, computer program, source code, algorithm, invention,
design, blueprint, engineering drawing, proprietary product, technology,
proprietary right or other intellectual property right or intangible asset;
and (b) right to use or exploit any of the foregoing.
PROSPECTUS/PROXY STATEMENT. "Prospectus/Proxy Statement" shall mean the
proxy statement to be sent to the Company's stockholders in connection with
the Company Stockholders' Meeting.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors, affiliates, Subsidiaries
and representatives.
REQUIRED COMPANY STOCKHOLDER VOTE. "Required Company Stockholder Vote"
shall have the meaning ascribed thereto in Section 2.23.
REQUIRED PARENT SHAREHOLDER VOTE. "Required Parent Shareholder Vote"
shall have the meaning ascribed thereto in Section 3.23.
S-4 REGISTRATION STATEMENT. "S-4 Registration Statement" shall have the
meaning ascribed thereto in Section 2.27(c).
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
SIGNING DATE CLOSING PRICE. "Signing Date Closing Price" shall have the
meaning ascribed thereto in Section 1.5(b)(iii).
SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record,
(a) an amount of voting securities of other interests in such Entity that is
sufficient to enable such Person to elect at leased a majority of the members
of such Entity's board of directors or other governing body, or (b) at least
50% of the outstanding equity or financial interests or such Entity.
SURVIVING CORPORATION. "Surviving Corporation" shall have the meaning
ascribed thereto in Section 1.1.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, estimated
tax, unemployment tax, national health insurance tax, excise tax, ad valorem
tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax,
withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by
or under the authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule,
notice, notification, form, election, certificate or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
THIRD PARTY PROPRIETARY ASSETS. "Third Party Proprietary Assets" shall
have the meaning ascribed thereto in Section 2.7(b).
VOTING AGREEMENT. "Voting Agreement" shall have the meaning ascribed
thereto in Recital D.
