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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
among
GUILFORD PHARMACEUTICALS INC.,
GLIATECH INC.
and
ST. XXXX DEVELOPMENT CORP.
Dated as of May 29, 2000
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.................................................................................2
1.1. The Merger............................................................................2
1.2. Closing...............................................................................2
1.3. Effective Time........................................................................2
ARTICLE II THE SURVIVING COMPANY.....................................................................3
2.1. Certificate of Incorporation..........................................................3
2.2. By-Laws...............................................................................3
2.3. Board of Directors....................................................................3
ARTICLE III CONVERSION OF SHARES.....................................................................3
3.1. Effect on Stock.......................................................................3
3.2. Exchange of Certificates for Shares...................................................4
3.3. Appraisal Rights......................................................................7
3.4. Adjustments to Prevent Dilution.......................................................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................8
4.1. Organization, Good Standing and Qualification.........................................8
4.2. Capitalization........................................................................8
4.3. Corporate Authority; Approval and Fairness............................................9
4.4. Governmental Filings; No Violations...................................................10
4.5. Company Reports; Financial Statements.................................................11
4.6. Absence of Certain Changes............................................................12
4.7. Litigation and Liabilities............................................................12
4.8. Employee Benefits.....................................................................13
4.9. Compliance with Laws; Permits.........................................................15
4.10. Takeover Statutes.....................................................................16
4.11. Environmental Matters.................................................................16
4.12. Taxes.................................................................................17
4.13 Labor Matters.........................................................................18
4.14. Intellectual Property; FDA Matters....................................................19
4.15. Title to Property.....................................................................21
4.16. Material Contracts....................................................................21
4.17. Brokers and Finders...................................................................22
4.18. Insurance.............................................................................22
4.19. Interested Party Transactions.........................................................22
4.20. Rights Plan...........................................................................22
4.21. Accounting, Tax and SEC Matters.......................................................23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY.............................23
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5.1. Merger Subsidiary.....................................................................23
5.2. Organization, Good Standing and Qualification.........................................24
5.3. Capitalization........................................................................24
5.4. Authority; Approval and Fairness......................................................25
5.5. Governmental Filings; No Violations...................................................26
5.6. Parent Reports; Financial Statements..................................................27
5.7. Absence of Certain Changes............................................................28
5.8. Litigation and Liabilities............................................................28
5.9. Compliance with Laws; Permits.........................................................28
5.10. Environmental Matters.................................................................29
5.11. Taxes.................................................................................30
5.12. Intellectual Property.................................................................31
5.13. Brokers and Finders...................................................................33
5.14. Accounting and Tax Matters............................................................33
5.15. Labor Matters.........................................................................34
5.16. Title to Property.....................................................................34
5.17. Material Contracts....................................................................34
5.18. Parent Employment Arrangements........................................................35
ARTICLE VI COVENANTS.................................................................................35
6.1. Interim Operations of the Company.....................................................35
6.2. Interim Operations of Parent..........................................................37
6.3. Interim Operations of Merger Subsidiary...............................................38
6.4. Acquisition Proposals.................................................................38
6.5. Information Supplied..................................................................39
6.6. Stockholders Meetings.................................................................40
6.7. Filings; Other Actions; Notification..................................................41
6.8. Taxation and Accounting...............................................................42
6.9. Access................................................................................42
6.10. Affiliates............................................................................43
6.11. Publicity.............................................................................44
6.12. Benefits..............................................................................44
6.13. Expenses..............................................................................46
6.14. Indemnification; Directors' and Officers' Insurance...................................46
6.15. Other Actions by the Company and Parent...............................................48
6.16 Board of Directors....................................................................49
ARTICLE VII CONDITIONS...............................................................................49
7.1. Conditions to Each Party's Obligation to Effect the Merger............................49
7.2. Conditions to Obligations of Parent and Merger Subsidiary.............................50
7.3. Conditions to Obligation of the Company...............................................51
ARTICLE VIII TERMINATION.............................................................................52
8.1. Termination by Mutual Consent.........................................................52
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8.2. Termination by Either Parent or the Company...........................................52
8.3. Termination by the Company............................................................53
8.4. Termination by Parent.................................................................53
8.5. Effect of Termination and Abandonment.................................................54
ARTICLE IX MISCELLANEOUS AND GENERAL.................................................................55
9.1. Survival..............................................................................55
9.2. Modification or Amendment.............................................................56
9.3. Waiver of Conditions..................................................................56
9.4. Counterparts..........................................................................56
9.5. Governing Law; Waiver of Jury Trial...................................................56
9.6. Notices...............................................................................57
9.7. Entire Agreement; No Other Representations............................................58
9.8. No Third Party Beneficiaries..........................................................58
9.9. Severability..........................................................................58
9.10. Interpretation........................................................................58
9.11. Assignment............................................................................59
9.12. Definitions...........................................................................59
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement"), dated as of May 29, 2000 among Guilford Pharmaceuticals Inc., a
Delaware corporation (the "Company"), Gliatech Inc., a Delaware corporation
("Parent"), and St. Xxxx Development Corp., a Delaware corporation ("Merger
Subsidiary").
RECITALS
--------
WHEREAS, the respective boards of directors of each of Parent,
the Company, and the Merger Subsidiary, have adopted this Agreement and
determined that the merger of the Merger Subsidiary with and into the Company
(the "Merger") upon the terms and subject to the conditions set forth in this
Agreement is advisable and have approved the Merger;
WHEREAS, in order to induce Parent and Merger Subsidiary to
enter into this Agreement, concurrently herewith certain officers and each of
the directors of the Company are entering into stockholder agreements with
Parent (the "Stockholder Agreements"), pursuant to which, among other things,
each such person agrees to vote as a stockholder in favor of this Agreement and
the Merger and against any competing proposals;
WHEREAS, it is intended that, for federal income tax purposes,
the Merger shall qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code");
WHEREAS, for financial accounting purposes, it is intended
that the Merger shall be accounted for as a "pooling-of-interests;" and
WHEREAS, the Company, Parent and Merger Subsidiary desire to
make certain representations, warranties, covenants and agreements in connection
with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
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ARTICLE I
THE MERGER
1.1. THE MERGER.
Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.3) the Merger
Subsidiary shall be merged with and into the Company and the separate corporate
existence of the Merger Subsidiary shall thereupon cease. The Company shall be
the surviving company in the Merger (sometimes hereinafter referred to as the
"Surviving Company"), and the separate legal existence of the Company with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger. The Merger shall have the effects specified in the
Delaware General Corporation Law, as amended (the "DGCL").
1.2. CLOSING.
The closing of the Merger (the "Closing") shall take place (i)
at the offices of Xxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000 at 9:00 A.M. not later than the second business day after the day
on which the last to be fulfilled or waived of the conditions set forth in
Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement or
(ii) at such other place and time and/or on such other date as the Company and
Parent may agree (the "Closing Date").
1.3. EFFECTIVE TIME.
As soon as practicable following the Closing, the Company,
Merger Subsidiary and Parent will cause a Certificate of Merger (the
"Certificate of Merger") to be executed, acknowledged and filed with and
accepted for record by the Delaware Secretary of State (the "Secretary") as
provided in Section 251 of the DGCL. The Merger shall become effective at the
time the Certificate of Merger is filed with the Secretary or at such later time
agreed by the Company and Parent and established under the Certificate of
Merger, not to exceed 30 days after the Certificate of Merger is filed with the
Secretary (the "Effective Time").
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ARTICLE II
THE SURVIVING COMPANY
2.1. CERTIFICATE OF INCORPORATION.
The certificate of incorporation of the Company in effect at
the Effective Time shall be the certificate of incorporation (the "Certificate
of Incorporation") of the Surviving Company, provided that immediately after the
Effective Time the Certificate of Incorporation shall be amended to read in its
entirety like the certificate of incorporation of the Merger Subsidiary as in
effect immediately prior to the Effective Time, except that Article 1. of such
certificate of incorporation shall be amended in its entirety to read as
follows: "The name of the corporation is Gliatech Inc. (the "Corporation")."
2.2. BY-LAWS.
The by-laws of Merger Subsidiary in effect at the Effective
Time, shall be adopted as the by-laws of the Surviving Company (the "By-Laws"),
until thereafter amended as provided therein or by applicable law.
2.3. BOARD OF DIRECTORS.
The Board of Directors of Merger Subsidiary at the Effective
Time shall, from and after the Effective Time, be the Board of Directors of the
Surviving Company until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Certificate of Incorporation and the By-Laws.
ARTICLE III
CONVERSION OF SHARES
3.1. EFFECT ON STOCK.
At the Effective Time, as a result of the Merger and without
any action on the part of the holder of any stock of the Company:
(a) MERGER CONSIDERATION. Each share of Common Stock, $0.01
par value per share, of the Company ("Company Common Stock") (each a "Share" or,
collectively, the "Shares") issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled pursuant to Section 3.1(b)
hereof) shall be converted into, and become exchangeable for the right to
receive consideration (the "Merger Consideration"), consisting of 1.38 shares
(the "Exchange Ratio") of Common Stock, $0.01 par value per share, of Parent
(the "Parent Common Stock") (including any related Rights issued pursuant to the
Rights Agreement (the "Parent Rights Agreement") dated September 26,
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1995, as amended, between Parent and American Stock Transfer and Trust Company).
At the Effective Time, all Shares shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and each
certificate (a "Certificate") formerly representing any of such Shares shall
thereafter represent only the right to receive the Merger Consideration, cash in
lieu of fractional shares pursuant to SECTION 3.2(e), if any, and any
distribution or dividend pursuant to SECTION 3.2(c).
(b) CANCELLATION OF SHARES. Each Share issued and outstanding
immediately prior to the Effective Time and owned by Parent or owned by the
Company or any direct or indirect Subsidiary of the Company (in each case other
than Shares that are owned on behalf of third parties), shall, by virtue of the
Merger and without any action on the part of the holder thereof, cease to be
outstanding and shall be canceled and retired without payment of any
consideration therefor.
(c) MERGER SUBSIDIARY. At the Effective Time, each share of
common stock of Merger Subsidiary issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common stock of the
Surviving Company.
3.2. EXCHANGE OF CERTIFICATES FOR SHARES.
(a) EXCHANGE AGENT. Not later than the Effective Time, Parent
shall deposit, or shall cause to be deposited, with American Stock Transfer &
Trust Co. or another entity selected by Parent prior to the Effective Time with
the Company's approval, which shall not be unreasonably withheld (the "Exchange
Agent"), for the benefit of the holders of Shares, certificates representing the
shares of Parent Common Stock and, after the Effective Time, if applicable, any
cash, dividends or other distributions with respect to Parent Common Stock to be
issued or paid pursuant to SECTION 3.2(c) or SECTION 3.2(e) in exchange for
Shares outstanding immediately prior to the Effective Time upon due surrender of
the Certificates (or affidavits of loss in lieu thereof) pursuant to the
provisions of this ARTICLE III (such certificates for shares of Parent Common
Stock, together with the amount of any dividends or other distributions payable
with respect thereto and any cash in lieu of fractional Shares, being
hereinafter referred to as the "Exchange Fund").
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record of Shares
(i) a letter of transmittal specifying that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates (or affidavits of loss in lieu thereof) to the Exchange Agent, and
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(ii) instructions for use in effecting the surrender of the Certificates in
exchange for (a) certificates representing shares of Parent Common Stock and (b)
any unpaid dividends and other distributions and cash in lieu of fractional
shares. Subject to SECTION 3.2(h), upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor (x) a certificate representing that number of whole shares of
Parent Common Stock that such holder is entitled to receive pursuant to this
ARTICLE III, (y) a check in the amount (after giving effect to any required tax
withholdings) of any cash in lieu of fractional shares plus any unpaid dividends
or other distributions that such holder has the right to receive pursuant to the
provisions of this ARTICLE III, and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on any amount payable
upon due surrender of the Certificates. In the event of a transfer of ownership
of Shares that is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock,
together with a check for any cash to be paid upon due surrender of the
Certificate and any other dividends or distributions in respect thereof, may be
issued and/or paid to such a transferee if the Certificate formerly representing
such Shares is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Person (as defined below) requesting such
exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for shares of Parent Common Stock in a name other than
that of the registered holder of the Certificate surrendered, or shall establish
to the satisfaction of Parent or the Exchange Agent that such tax has been paid
or is not applicable. For the purposes of this Agreement, the term "Person"
shall mean any individual, corporation (including not-for-profit), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, governmental entity or other entity of any kind or
nature.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES; VOTING.
(i) All shares of Parent Common Stock to be issued
pursuant to the Merger shall be deemed issued and outstanding as of the
Effective Time and whenever a dividend or other distribution is declared by
Parent in respect of Parent Common Stock, the record date for which is at or
after the Effective Time, that declaration shall include dividends or other
distributions in respect of all shares issuable pursuant to this Agreement. No
dividends or other distributions in respect of Parent Common Stock shall be
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paid to any holder of any unsurrendered Certificate until such Certificate is
surrendered for exchange in accordance with this ARTICLE III. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be issued and/or paid to the holder of the certificates representing whole
shares of Parent Common Stock issued in exchange therefor, without interest, (a)
at the time of such surrender, the dividends or other distributions with a
record date after the Effective Time and a payment date on or prior to such time
of surrender payable with respect to such whole shares of Parent Common Stock
and not paid and (b) at the appropriate payment date, the dividends or other
distributions payable with respect to such whole shares of Parent Common Stock
with a record date after the Effective Time but with a payment date subsequent
to surrender.
(ii) Holders of unsurrendered Certificates who were
the registered holders at the Effective Time shall be entitled to vote after the
Effective Time at any meeting of Parent stockholders the number of whole shares
of Parent Common Stock represented by such Certificates, regardless of whether
such holders have exchanged their Certificates.
(d) TRANSFERS. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time.
(e) FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement, no fractional shares of Parent Common Stock will be issued and
any holder of Shares entitled to receive a fractional share of Parent Common
Stock but for this SECTION 3.2(e) shall be entitled to receive a cash payment in
lieu thereof, which payment shall equal the amount determined by multiplying (i)
the fraction of a share of Parent Common Stock to which such holder would
otherwise be entitled by (ii) the average closing price of a share of Parent
Common Stock as reported on the NASDAQ National Market ("NASDAQ") for the twenty
most recent days that Parent Common Stock has traded ending on the third trading
day prior to the Effective Time. The fractional share interests of each holder
of Company Common Stock shall be aggregated, so that no such holder shall
receive cash in an amount equal to or greater than the value of one share of
Parent Common Stock.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund (including the proceeds of any investments thereof and any Parent Common
Stock) that remains unclaimed by the stockholders of the Company for 180 days
after the Effective Time shall be paid to Parent. Any stockholders of the
Company who have not theretofore complied with this ARTICLE III shall thereafter
look only to Parent for payment of their shares of Parent Common Stock and any
cash, dividends and other distributions in
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respect thereof payable and/or issuable pursuant to SECTION 3.1, SECTION 3.2(c)
AND SECTION 3.2(e) upon due surrender of their Certificates (or affidavits of
loss in lieu thereof), in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Company, the
Exchange Agent or any other Person shall be liable to any former holder of
Shares for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such Person of a
bond in customary amount as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the shares of Parent Common Stock
and any cash payable and any unpaid dividends or other distributions in respect
thereof pursuant to Section 3.2(c) upon due surrender of and deliverable in
respect of the Shares represented by such Certificate pursuant to this
Agreement.
(h) AFFILIATES. Notwithstanding anything herein to the
contrary, Certificates surrendered for exchange by any "Affiliate" (as
determined pursuant to SECTION 6.10) of the Company shall not be exchanged until
Parent has received a written agreement from such Person as provided in SECTION
6.10 hereof.
3.3. APPRAISAL RIGHTS.
In accordance with Section 262(b) of the DGCL, no appraisal
rights shall be available to holders of Shares in connection with the Merger.
3.4. ADJUSTMENTS TO PREVENT DILUTION.
In the event that after the date hereof and prior to the
Effective Time the Company changes the number of Shares or securities
convertible or exchangeable into or exercisable for Shares, or Parent changes
the number of shares of Parent Common Stock or securities convertible or
exchangeable into or exercisable for shares of Parent Common Stock, issued and
outstanding prior to the Effective Time as a result of a reclassification, stock
split (including a reverse split), stock dividend or distribution,
recapitalization, merger, subdivision, issuer tender or exchange offer, or other
similar transaction, the Merger Consideration shall be equitably adjusted.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections or
subsections of the Company disclosure schedule delivered to Parent in connection
with the execution of this Agreement (the "Company Disclosure Schedule"), the
Company hereby represents and warrants to Parent and Merger Subsidiary that:
4.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and each of its
Subsidiaries is a corporation or other entity duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization. Each of the Company and each of its Subsidiaries has all requisite
corporate or similar power and authority to own and operate its properties and
assets and to carry on its business as presently conducted and is qualified to
do business and is in good standing in each jurisdiction where the ownership or
operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing,
when taken together with all other such failures, is not reasonably likely to
have a Company Material Adverse Effect (as defined in SECTION 9.12(b)). The
Company has made available to Parent a complete and correct copy of the
Company's and each Subsidiaries' charter and by-laws or equivalent
organizational documents, each as amended to and as in effect as of the date
hereof. The Company does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable for
any equity or similar interest in, any Person other than its Subsidiaries.
4.2. CAPITALIZATION.
The authorized stock of the Company consists of 30,000,000
Shares, of which 9,511,087 Shares were outstanding as of the close of business
on May 26, 2000, and 5,000,000 shares of Preferred Stock, par value .01 per
share (the "Preferred Shares"), of which no shares were outstanding as of the
close of business on the date hereof. All of the outstanding Shares have been
duly authorized and are validly issued, fully paid and nonassessable. The
Company has no commitments to issue or deliver Shares or Preferred Shares,
except that, as of the date hereof, there were 2,128,250 Shares subject to
issuance pursuant to the Company's Amended and Restated 1989 Stock Option Plan,
1992 Directors Stock Option Plan, 1995 Amended and Restated Nonemployee Director
Stock Option Plan and Director's Equity Plan (collectively the "Company Stock
Plans"), 18,000 Shares subject to issuance pursuant to stock options granted
outside of the Company Stock Plans, and
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300,000 Preferred Shares subject to issuance pursuant to the Company Rights
Agreement. SECTION 4.2 of the Company Disclosure Schedule contains a list, which
is complete and accurate in all respects as of the date hereof, of each
outstanding option to purchase or acquire Shares under each of the Company Stock
Plans or otherwise (each a "Company Option"), including the plan, if applicable,
the holder, date of grant, exercise price, vesting provisions and number of
Shares subject thereto. The Company has no outstanding Deferred Stock Awards or
options, or commitments to issue the same under the Company's Director Equity
Plan. Each of the outstanding shares of capital stock or other securities of
each of the Company's Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and owned by the Company or a Company Subsidiary, free
and clear of any lien, pledge, security interest, claim or other encumbrance.
The Company has no warrants outstanding for purchase of its common stock and,
except as described in this SECTION 4.2 or in SECTION 4.2 of the Company
Disclosure Schedule, there are no preemptive or other outstanding rights,
options, conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements or commitments to issue or sell any
shares of capital stock or other securities of the Company or any of its
Subsidiaries or any securities or obligations convertible or exchangeable into
or exercisable for, or giving any Person a right to subscribe for or acquire,
any securities of the Company or any of its Subsidiaries, and no securities or
obligations evidencing such rights are authorized, issued or outstanding. The
Company does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or, except as referred
to in this Section 4.2, convertible into or exercisable for securities having
the right to vote) with the stockholders of the Company on any matter.
4.3. CORPORATE AUTHORITY; APPROVAL AND FAIRNESS.
(a) The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement, subject only to
approval of the Merger by the holders of at least a majority of the outstanding
Shares (the "Company Requisite Vote"), to consummate the Merger. This Agreement
is a valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as enforceability may be limited or
affected by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws and equitable principles now or hereafter in
effect and affecting the rights and remedies of creditors generally.
(b) The Board of Directors of the Company, at a meeting duly
called and held, by unanimous vote of all members present and constituting a
quorum (i) has approved, adopted and declared advisable this Agreement and
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the Merger and the other transactions contemplated hereby and (ii) has resolved
to submit the Merger and the other transactions contemplated by this Agreement,
and recommend approval thereof by, the stockholders of the Company. The Board of
Directors of the Company has received the opinion of its financial advisor XX
Xxxxx Securities Corporation, to the effect that, as of the date of such
opinion, the Merger Consideration is fair from a financial point of view to
holders of Shares.
4.4. GOVERNMENTAL FILINGS; NO VIOLATIONS.
(a) Other than the filings and/or notices pursuant to or
required by (i) SECTION 1.3 hereof, (ii) the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and Applicable Foreign
Competition Laws, (iii) the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (iv) the Securities Act of 1933, as amended (the "Securities
Act"), (v) state securities or "blue-sky" laws, (vi) Section 251 of the DGCL and
(vii) Nasdaq, the execution and delivery of this Agreement by the Company and
the consummation by the Company of the Merger and the other transactions
contemplated hereby do not require any filings, notices, consents or approvals
with or by any Court, administrative agency, commission, government or
regulatory authority, domestic or foreign, except those that the failure to make
or obtain would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement.
(b) Subject to compliance with the filings described in
SECTION 4.4(a) and obtaining Private Consents (as defined below) applicable to
the Company and its Subsidiaries, the execution, delivery and performance of
this Agreement by the Company do not, and the consummation by the Company of the
Merger and the other transactions contemplated hereby will not, constitute or
result in (i) a breach or violation of, or a default under, the certificate of
incorporation or by-laws of the Company or the comparable governing instruments
of any of its Subsidiaries, (ii) a breach or violation of, or a default under,
or the acceleration of any obligations or the creation of a lien, pledge,
security interest or other encumbrance on the assets of the Company or any of
its Subsidiaries (with or without notice, lapse of time or both) pursuant to,
any agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation ("Contracts") binding upon the Company or any of its Subsidiaries,
(iii) any change in the rights or obligations of any party under any of those
Contracts, (iv) any conflict with or violation of any Laws (as defined in
SECTION 4.9) that would impair the Company's or any of the Company's
Subsidiaries' business or their ability to consummate the transactions
contemplated by this Agreement or adversely affect any licenses or
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approvals necessary to enable the Company and its Subsidiaries to carry on their
business as presently conducted, except, in the case of clauses (ii), (iii) or
(iv), for any conflict, breach, violation, default, acceleration, declaration,
imposition or impairment that would not be reasonably likely to have a Company
Material Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by this
Agreement. SCHEDULE 4.4(b) to this Agreement sets forth a list of Contracts (by
category and type, where applicable) material to the Company and its
Subsidiaries, taken as a whole, pursuant to which consents or waivers ("Private
Consents") are required prior to consummation of the transactions contemplated
by this Agreement (whether or not subject to the exception set forth with
respect to clauses (ii), (iii) and (iv) above).
4.5. COMPANY REPORTS; FINANCIAL STATEMENTS.
The Company has delivered or made available to Parent each
registration statement, report, proxy statement or information statement
prepared by it since December 31, 1999 (the "Company Audit Date"), including (a)
the Company's Annual Report on Form 10-K for the year ended December 31, 1999
(b) the Company's Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2000 and (c) the Company's definitive Proxy Statement for its 2000
Annual Meeting of Stockholders, each in the form (including exhibits, annexes
and any amendments thereto) filed with the Securities and Exchange Commission
(the "SEC") (collectively, including any such reports filed subsequent to the
date hereof, the "Company Reports"). As of their respective dates the Company
Reports complied, and any Company reports filed with the SEC subsequent to the
date hereof will comply, as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the SEC. As of their respective dates, the Company
Reports did not, and any Company Reports filed with the SEC subsequent to the
date hereof will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents, or will fairly present, in all material
respects, the consolidated financial position of the Company and its
Subsidiaries as of its date and each of the consolidated statements of income
and of changes in financial position included in or incorporated by reference
into the Company Reports (including any related notes and schedules) fairly
presents, or will fairly present, in all material respects, the consolidated
results of operations, retained earnings and changes in financial position, as
the case may be, of the Company and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited
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statements, to notes and normal year-end audit adjustments), in each case in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, except as may be noted therein.
4.6. ABSENCE OF CERTAIN CHANGES.
Except as disclosed in the Company Reports filed prior to the
date hereof or as set forth on SECTION 4.6 of the Company Disclosure Schedule,
since the Company Audit Date, the Company and its Subsidiaries have conducted
their respective businesses only in, and have not engaged in any material
transaction other than according to, the ordinary and usual course of such
businesses and there has not been: (a) any Company Material Adverse Effect or
other event, or any other development or combination of developments of which
the Responsible Executive Officers of the Company have knowledge, that,
individually or in the aggregate, is reasonably likely to result in a Company
Material Adverse Effect; (b) any material damage, destruction or other casualty
loss with respect to any material asset or property owned, leased or otherwise
used by the Company or any of its Subsidiaries, whether or not covered by
insurance; (c) any authorization, declaration, setting aside or payment of any
dividend or other distribution in respect of the stock of the Company, except as
permitted by SECTION 6.1 hereof; (d) any change by the Company in accounting
principles, practices or methods other than as required by changes in applicable
GAAP; or (e) any repurchase or redemption of any Shares. Since the Company Audit
Date, except as provided for herein or as disclosed in the Company Reports filed
prior to the date hereof or as set forth on SECTION 4.6 of the Company
Disclosure Schedule, there has not been any increase in the compensation payable
or that could become payable by the Company or any of its Subsidiaries to
officers at the vice president level or above or any amendment of any of the
Company Compensation and Benefit Plans (as defined in SECTION 4.8(a)). The
maximum financial liability to which the Company would be subject in the event
of the early termination of any lease for property described in SECTION 4.6 of
the Company Disclosure Schedule would not exceed an amount disclosed in SECTION
4.6 of the Company Disclosure Schedule.
4.7. LITIGATION AND LIABILITIES.
Except as disclosed in the Company Reports filed prior to the
date hereof or as set forth on SECTION 4.7 of the Company Disclosure Schedule,
there are no (a) civil, criminal or administrative actions, suits, claims,
hearings, investigations, proceedings, judgments, decrees, orders or injunctions
outstanding, pending or, to the knowledge of the Responsible Executive Officers
of the Company, threatened against the Company or any of its Subsidiaries or (b)
obligations or liabilities of any nature, whether or not
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accrued, contingent or otherwise and whether or not required to be disclosed, or
any other facts or circumstances of which the Responsible Executive Officers
have knowledge, that have resulted in or could reasonably be expected to result
in any claims against, or obligations or liabilities of, the Company or any of
the Subsidiaries, except, in each case, for such actions, suits, claims,
hearings, investigations, proceedings, obligations and liabilities that would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect or prevent or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement.
4.8. EMPLOYEE BENEFITS.
(a) A copy of each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, change of control, compensation, medical, health or other plan,
agreement, policy or arrangement that covers, or, in the past three years, has
covered employees, directors, former employees or former directors of the
Company and its Subsidiaries (the "Company Compensation and Benefit Plans") and
any trust agreement or insurance contract forming a part of such Company
Compensation and Benefit Plans has been made available to Parent prior to the
date hereof. For the three most recent plan years, all annual reports (Form 5500
series) on each Company Compensation and Benefit Plan that have been filed with
any governmental agency and the current summary plan description and subsequent
summaries of material modifications for each Company Compensation and Benefit
Plan have been made available to Parent prior to the date hereof. The
Compensation and Benefit Plans are listed on SECTION 4.8 of the Company
Disclosure Schedule and any "change of control" or similar provisions therein
are specifically identified on SECTION 4.8 of the Company Disclosure Schedule.
(b) All Company Compensation and Benefit Plans are in
compliance in all material respects with all applicable laws, including, to the
extent applicable, the Code and the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Each Company Compensation and Benefit Plan that is
an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA
and that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service, and
the Company is not aware of any circumstances likely to result in revocation of
any such favorable determination letter. There is no pending or, to the
knowledge of the Responsible Executive Officers of the Company, threatened
litigation relating to the Company Compensation and Benefit Plans. Neither the
Company nor any of its Subsidiaries has engaged in a transaction with respect to
any Company Compensation and Benefit Plan
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that, assuming the taxable period of such transaction expired as of the date
hereof, would subject the Company or any of its Subsidiaries to a material tax
or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA.
(c) Neither the Company nor any of its Subsidiaries currently
has and at no time in the past has had an obligation to contribute to a "defined
benefit plan" as defined in Section 3(35) of ERISA, a pension plan subject to
the funding standards of Section 302 of ERISA or Section 412 of the Code, a
"multiemployer plan" as defined in Section 3(37) of ERISA or Section 414(f) of
the Code or a "multiple employer plan" within the meaning of Section 210(a) of
ERISA or Section 413(c) of the Code.
(d) All contributions required to be made under the terms of
any Company Compensation and Benefit Plan as of the date hereof have been timely
made or have been reflected on the most recent consolidated balance sheet filed
or incorporated by reference in the Company Reports prior to the date hereof,
except where the failure to make such contributions, individually or in the
aggregate, would not reasonably be likely to result in a Company Material
Adverse Effect.
(e) Except as disclosed in SECTION 4.8 of the Company
Disclosure Schedule, neither the Company nor its Subsidiaries have any
obligations for retiree health and life benefits under any Company Compensation
and Benefit Plan, other than as mandated by the continuation coverage
requirements of Section 4980B of the Code and Section 162(k) of the Code, as
applicable, and Part 6 of Subtitle B of Title I of ERISA. The Company or its
Subsidiaries may amend or terminate any such plan under the terms of such plan
at any time without incurring any material liability thereunder.
(f) Except as disclosed in SECTION 4.8 of the Company
Disclosure Schedule, the Merger will not (i) entitle any employees of the
Company or its Subsidiaries to severance pay, (ii) accelerate the time of
payment or vesting or trigger any payment of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Company Compensation and Benefit Plans or (iii) result in any
breach or violation of, or a default under, any of the Company Compensation and
Benefit Plans.
(g) All Company Compensation and Benefit Plans covering
current or former non-U.S. employees of the Company and its Subsidiaries comply
in all material respects with applicable local law. The Company and its
Subsidiaries have no material unfunded liabilities with respect to any Pension
Plan that covers such non-U.S. employees.
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(h) The number of individuals who perform services for the
Company or any of its Subsidiaries on a full-time basis but who are not
employees of the Company or any of its Subsidiaries does not exceed 5% of the
workforce of the Company and its Subsidiaries.
(i) Except as set forth in SECTION 4.8 of the Company
Disclosure Schedule, no amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer, director or independent
contractor of the Company who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) would be characterized
as an "excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code).
4.9. COMPLIANCE WITH LAWS; PERMITS.
Except as set forth in the Company Reports filed prior to the
date hereof or on SECTION 4.9 of the Company Disclosure Schedule, the businesses
of each of the Company and its Subsidiaries have not been, and are not being,
conducted in violation of any federal, state, local or foreign law, statute,
ordinance, rule, regulation, judgment, order, injunction, decree, arbitration
award, agency requirement, license or permit of any governmental entity
("Laws"), except for violations or possible violations that, individually or in
the aggregate, do not or would not be reasonably likely to have a Company
Material Adverse Effect or prevent or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement. Except as
set forth in the Company Reports filed prior to the date hereof or on SECTION
4.9 of the Company Disclosure Schedule, no investigation or review by any
governmental entity with respect to the Company or any of its Subsidiaries is
pending or, to the knowledge of the Responsible Executive Officers of the
Company, threatened, nor has any governmental entity overtly indicated to the
Company an intention to conduct the same, except for those the outcome of which
would not, individually or in the aggregate, have a Company Material Adverse
Effect or prevent or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement. The Company and its
Subsidiaries each has all permits, licenses, trademarks, patents, trade names,
copyrights, service marks, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to conduct its
business as presently conducted except those the absence of which do not, or
would not be reasonably likely to, individually or in the aggregate, have a
Company Material Adverse Effect or prevent or materially impair the ability of
the Company to consummate the Merger and the other transactions contemplated by
this Agreement.
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4.10. TAKEOVER STATUTES.
The Board of Directors of the Company has taken all necessary
action so that no restrictive provision of any "fair price," "moratorium,"
"control share" or other similar anti-takeover statute or regulation, including,
but not limited to, ss. 203 of the DGCL, (each a "Takeover Statute") or
restrictive provision of any applicable anti-takeover provision in the charter
or by-laws of the Company, is, or at the Effective Time will be, applicable to
the Company, the Shares, the Merger or any transaction contemplated by this
Agreement or the Stockholder Agreements.
4.11. ENVIRONMENTAL MATTERS.
Except as disclosed in the Company Reports filed prior to the
date hereof or on SECTION 4.11 of the Company Disclosure Schedule, and except
for such matters that, alone or in the aggregate, have not and would not be
reasonably likely to have a Company Material Adverse Effect: (a) the Company and
its Subsidiaries have complied with all applicable Environmental Laws (as
defined in SECTION 9.12 (b)); (b) the properties currently owned or operated by
the Company (including soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substances (as defined in
SECTION 9.12 (b)) and, to the knowledge of the Responsible Executive Officers of
the Company, do not contain wetlands, dumps, filled in land, PCBs, asbestos or
underground storage tanks; (c) the properties formerly owned or operated by the
Company or any of its Subsidiaries were not contaminated with Hazardous
Substances during the period of ownership or operation by the Company or any of
its Subsidiaries; (d) neither the Company nor any Subsidiary is subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (e) no Hazardous Substance has been transported from any of the
properties owned or operated by the Company or any of its Subsidiaries other
than in compliance with applicable Environmental Law; (f) neither the Company
nor any of its Subsidiaries has received any written notice, demand, letter,
claim or request for information from any Governmental Entity or third party
indicating that the Company or any of its Subsidiaries may be in violation of or
liable under any Environmental Law; (g) the Company and its Subsidiaries are not
subject to any court order, administrative order or decree arising under any
Environmental Law and are not subject to any indemnity or other agreement with
any third party relating to liability under any Environmental Law or relating to
Hazardous Substances; and (h) to the knowledge of the Responsible Executive
Officers of the Company there are no circumstances or conditions involving the
Company or any of its Subsidiaries that could reasonably be expected to result
in any claims, liability, investigations, costs or restrictions on the
ownership, use, or transfer of any property of the Company pursuant to any
Environmental Law.
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4.12. TAXES.
Except as disclosed in the Company Reports filed prior to the
date hereof or as set forth on SECTION 4.12 of the Company Disclosure Schedule
and except for such matters that, alone or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect:
(a) Each of the Company, each of its Subsidiaries and any
affiliated, combined or unitary group of which any such corporation is or was a
member has (i) timely (taking into account any extensions) filed all federal
income tax and all other material federal and all material state, local and
foreign returns, declarations, reports, estimates, information returns and
statements ("Returns") required to be filed or sent by or with respect to it in
respect of any Taxes, (ii) timely paid all Taxes that are due and payable
(except for audit adjustments not material in the aggregate or to the extent
that liability therefor is reserved for in the Company's most recent audited
financial statements) for which the Company or any of its Subsidiaries may be
liable, (iii) established reserves that are adequate for the payment of all
Taxes not yet due and payable with respect to the results of operations of the
Company and its Subsidiaries through the date hereof, and (iv) complied in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes and has in all material respects timely
withheld from employee wages and paid over to the proper Taxing Authorities all
amounts required to be so withheld and paid over.
(b) (i) All federal income tax Returns of the Company and any
of its Subsidiaries have been examined by the Internal Revenue Service (the
"IRS") or otherwise closed; (ii) except to the extent being contested in good
faith, all material deficiencies asserted as a result of such examinations and
any examination by any applicable state or local Taxing Authority have been
paid, fully settled or adequately provided for in the Company's most recent
audited financial statements; (iii) no material federal, state or local income
or franchise tax audits or other administrative proceedings or court proceedings
are at present pending with regard to any federal, state or local income or
franchise Taxes for which the Company or any of its Subsidiaries would be
liable, and (iv) no material deficiency for any such income or franchise Taxes
has been proposed, asserted or assessed pursuant to such examination against the
Company or any of its Subsidiaries by any federal, state or local taxing
authority with respect to any period.
(c) Neither the Company nor any of its Subsidiaries has
executed or entered into (or prior to the close of business on the Closing Date
will execute or enter into) with any Taxing Authority (i) any agreement or other
document extending or having the effect of extending the period for
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assessments or collection of any federal, state or local income or franchise
Taxes for which the Company or any of its Subsidiaries would be liable or (ii) a
closing agreement pursuant to Section 7121 of the Code, or any predecessor
provision thereof or any similar provision of state or local income tax law that
relates to the assets or operations of the Company or any of its Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries has made
an election under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries.
(e) Neither the Company nor any of its Subsidiaries is a party
to, is bound by or has any material obligation under any tax sharing agreement
or similar agreement or arrangement.
4.13 LABOR MATTERS.
(a) Neither the Company nor any of its Subsidiaries is a party
to or otherwise bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization. There are
no strikes or work stoppages in effect or, to the knowledge of the Responsible
Executive Officers of the Company, threatened with respect to the employees of
the Company or any of its Subsidiaries. There is no representation claim or
petition or material complaint pending before the National Labor Relations Board
or any state or local labor agency and, to the knowledge of the Responsible
Executive Officers of the Company, no question concerning representation has
been raised or threatened. No charges with respect to or relating to the
business of the Company or any its Subsidiaries are pending before the Equal
Employment Opportunity Commission, or any state or local agency responsible for
the prevention of unlawful employment practices, which would if adversely
determined be reasonably likely to have a Company Material Adverse Effect.
(b) SECTION 4.13 of the Company Disclosure Schedule contains a
complete and correct list of all material current employment, management or
other consulting agreements with any Persons employed or retained by the Company
or any of its Subsidiaries (including independent consultants), complete and
correct copies of which have been delivered to Parent.
(c) SECTION 4.13 of the Company Disclosure Schedule contains a
complete and correct list as of the date of this Agreement of all employees and
consultants employed or retained by the Company or any of its Subsidiaries
(including independent consultants), the job title of each such person and the
compensation currently being paid to each such person.
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4.14. INTELLECTUAL PROPERTY; FDA MATTERS.
(a) To the knowledge of the Responsible Officers of the
Company, except as disclosed in Company Reports prior to the date hereof or as
set forth on SECTION 4.14 of the Company Disclosure Schedule, the Company and/or
each of its Subsidiaries owns, or is licensed or otherwise possesses legally
enforceable rights in all material patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, technology, know-how, computer
software programs or applications, and tangible or intangible proprietary
information or materials that are used in the business of the Company and its
Subsidiaries as currently conducted, and all patents, trademarks, trade names,
service marks and copyrights held by the Company and/or its Subsidiaries are
valid and subsisting.
(b) To the knowledge of the Responsible Executive Officers of
the Company, except as disclosed in Company Reports filed prior to the date
hereof or SECTION 4.14 of the Company Disclosure Schedule and except for such
matters that, alone or in the aggregate, would not be reasonably likely to have
a Company Material Adverse Effect:
(i) the Company is not, nor will it be as a result of
the execution and delivery of this Agreement or the performance of its
obligations hereunder or as contemplated hereby, in violation of any licenses,
sublicenses and other agreements as to which the Company is a party and pursuant
to which it has been granted proprietary rights to use any third-party patents,
trademarks, service marks, trade secrets and copyrights ("Company Third-Party
Intellectual Property Rights");
(ii) no claims with respect to (a) the patents,
registered and unregistered trademarks and service marks, copyrights, trade
names, and any applications therefor owned by the Company or any its
Subsidiaries (the "Company Intellectual Property Rights"); (b) any trade secret
material to the Company; or (c) Company Third-Party Intellectual Property Rights
are currently pending or, to the knowledge of the Responsible Executive Officers
of the Company, are threatened by any Person;
(iii) (a) the sale, licensing or use of any product
as now used, sold or licensed or proposed for use, sale or license by the
Company or any of its Subsidiaries, does not infringe on any copyright, patent,
trademark, service xxxx or trade secret of any Person; and (b) there are no
valid grounds for any claims against the use by the Company or any of its
Subsidiaries, of any trademarks, trade names, trade secrets, copyrights,
patents, technology, or know-how used in the business of the Company or any of
its Subsidiaries as currently conducted or as proposed to be conducted,
challenging the
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ownership, validity or effectiveness of any of the Company Intellectual Property
Rights or other trade secret material to the Company, or challenging the license
or legally enforceable right to use of the Company Third-Party Intellectual
Rights by the Company or any of its Subsidiaries; and
(iv) there is no unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property Rights by any third
party, including any employee or former employee of the Company or any of its
Subsidiaries.
(c) SECTION 4.14 of the Company Disclosure Schedule contains a
list as of the date of this Agreement of all material (i) patents, patent
applications, registered and unregistered trademarks, trade names and service
marks, registered and unregistered copyrights, and maskworks included in the
Company's Intellectual Property Rights, including the jurisdictions in which
each such item of the Company's Intellectual Property Rights have been issued or
registered or in which any application for such issuance and registration has
been filed, (ii) licenses, sublicenses and other agreements as to which the
Company is a party and pursuant to which any person is authorized to use any of
the Company's Intellectual Property Rights, and (iii) Company Third-Party
Intellectual Property Rights which are incorporated in, are or form a part of
any Company product.
(d) Substantially all officers, employees and consultants of
the Company who have access to trade secrets or other proprietary intellectual
property owned by the Company and not otherwise protected by a patent, a patent
application, copyright, trademark, or other registration ("Company Confidential
Information") have executed and delivered to the Company an agreement regarding
the protection of proprietary information and the assignment to the Company of
any Intellectual Property arising from services performed for the Company by
such persons.
(e) The Company has taken all necessary steps to provide
reasonable assurance that all software systems used by the Company or its
critical vendors will not experience invalid or incorrect results or abnormal
operation related to calendar year 2000, except where such invalid or incorrect
results or abnormal operation would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect.
(f) Except as described on SECTION 4.14(f) of the Company
Disclosure Schedule, the Company is in compliance with the rules, regulations
and guidelines of the United States Food and Drug Administration ("FDA") and any
applicable non-U.S. governing body with respect to the products and operations
of the Company and its Subsidiaries, and has all approvals, permits
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and clearances of FDA and such other bodies necessary to the conduct of the
businesses of the Company and its Subsidiaries as currently conducted, except
where such non-compliance or absence of approvals, permits and clearances,
individually or in the aggregate, would not be reasonably likely to have a
Company Material Adverse Effect. The Company has disclosed to Parent all
material facts relating to communications from and with FDA and other regulatory
bodies relating to the development, manufacture, sale and distribution of the
Company's and any Subsidiary's products, product candidates and research
projects.
4.15. TITLE TO PROPERTY.
Except as set forth in the Company Reports or on SECTION 4.15
of the Company Disclosure Schedule, the Company and each of its Subsidiaries
have good and indefeasible title to all of their material properties and assets,
free and clear of all encumbrances, except liens for taxes not yet due and
payable and such encumbrances or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which would not be reasonably likely to have a
Company Material Adverse Effect, and except for encumbrances which secure
indebtedness reflected in the financial statements included in the Company
Reports.
4.16. MATERIAL CONTRACTS.
All of the Material Contracts of the Company and its
Subsidiaries that are required to be described in the Company Reports or to be
filed as exhibits thereto are described in the Company Reports or filed as
exhibits thereto and are in full force and effect in all material respects.
Neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Responsible Executive Officers of the Company, any other party is in breach of
or in default under any such Contract except for such breaches and defaults as
individually or in the aggregate have not had and would not be reasonably likely
to have a Company Material Adverse Effect. Except as set forth in SECTION 4.16
of the Company Disclosure Schedule neither the Company nor any of its
Subsidiaries is party to any agreement containing any provision or covenant
limiting in any material respect the ability of the Company or any of its
Subsidiaries to (a) sell any products or services of or to any other person, (b)
engage in any line of business or (c) compete with or to obtain products or
services from any person or limiting the ability of any person to provide
products or services to the Company or any of its Subsidiaries.
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4.17. BROKERS AND FINDERS.
Neither the Company nor any of its executive officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with
the Merger or the other transactions contemplated in this Agreement, except that
the Company has employed XX Xxxxx Securities Corporation as its financial
advisors, the arrangements with respect to which are reflected in an engagement
letter, dated January 4, 2000, as amended on March 9, 2000, by and between the
Company and XX Xxxxx Securities Corporation, a copy of which has been delivered
to Parent.
4.18. INSURANCE.
The Company has heretofore provided Parent with true, complete
and correct copies of all material fire and casualty, general liability,
business interruption, product liability, clinical trail liability and other
insurance policies maintained by the Company and its Subsidiaries. All such
policies are in full force and effect in all material respects and no event has
occurred that would give any insurance carrier a right to terminate any such
policy. Neither the Company nor any of its Subsidiaries has been denied or had
any policy of insurance revoked or rescinded. To the knowledge of the
Responsible Executive Officers of the Company, all such policies are adequate to
insure against risks to which the Company and its properties are exposed in such
amounts and subject to such terms as are commercially reasonable for the
business in which the Company and its Subsidiaries are engaged.
4.19. INTERESTED PARTY TRANSACTIONS.
Except as set forth in the Company Reports or on SECTION 4.19
of the Company Disclosure Schedule, since the Company Audit Date no event has
occurred that would be required to be reported pursuant to Item 404 of
Regulation S-K as promulgated by the SEC in a Proxy Statement filed under the
Exchange Act.
4.20. RIGHTS PLAN.
The Company has adopted a Rights Agreement dated July 1, 1997
between the Company and American Stock Transfer & Trust Company, as amended (the
"Company Rights Agreement") and has provided in an amendment thereto dated May
29, 2000 that Parent shall not be deemed an Acquiring Person, the Distribution
Date (each as defined in the Company Rights Agreement) shall not be deemed to
occur and the rights issuable pursuant to the Company Rights Agreement (the
"Company Rights") will not separate from the Shares, as a result of Parent or
Merger Subsidiary entering
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into this Agreement, the Stockholder Agreements or consummating the Merger or
the other transactions contemplated hereby or thereby.
4.21. ACCOUNTING, TAX AND SEC MATTERS.
(a) As of the date hereof, neither the Company nor any of its
Affiliates has taken or agreed to take any action, nor do the Responsible
Executive Officers of the Company have any knowledge of any fact or
circumstance, that would prevent Parent or the Company from accounting for the
business combination to be effected by the Merger as a "pooling-of-interests" or
prevent the Merger and the other transactions contemplated by this Agreement
from qualifying as a "reorganization" within the meaning of Section 368(a) of
the Code.
(b) The Company has provided to the Company's and Parent's
independent accountants all information concerning actions taken or agreed to be
taken by the Company or any of its Affiliates on or before the date of this
Agreement that could reasonably be expected to affect the ability of Parent to
account for the business combination to be effected by the Merger as a pooling
of interests.
(c) To the knowledge of the Responsible Executive Officers of
the Company, except for routine matters relating to the review of Company
Reports by the SEC Division of Corporation Finance, the Company has not and is
not the subject of any formal or informal inquiry or investigation by the SEC.
The Company has provided to Parent all written communications between the
Company (or any of its officers and directors) and the Securities and Exchange
Commission since December 31, 1998 (other than those constituting Company
Reports).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUBSIDIARY
Except as set forth in the corresponding sections or
subsections of the Parent Disclosure Schedule delivered to the Company in
connection with the execution of this Agreement (the "Parent Disclosure
Schedule"), Parent and Merger Subsidiary hereby, jointly and severally,
represent and warrant to the Company that:
5.1. MERGER SUBSIDIARY.
(a) Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
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(b) Merger Subsidiary has one hundred shares of common stock,
par value $.01 per share ("Merger Subsidiary Stock"), all of which are validly
issued and outstanding and are, and at the Effective Time will be, owned solely
by Parent, and there are (i) no other voting securities of Merger Subsidiary,
(ii) no securities of Merger Subsidiary convertible into or exchangeable for
Merger Subsidiary Stock or other voting securities of Merger Subsidiary and
(iii) no options or other rights to acquire from Merger Subsidiary, and no
obligations of Merger Subsidiary to issue or deliver, any Merger Subsidiary
Stock or other voting securities or securities convertible into or exchangeable
for Merger Subsidiary Stock or other voting securities of Merger Subsidiary.
(c) Merger Subsidiary has not conducted any business prior to
the date hereof and has no, and prior to the Effective Time will have no,
assets, liabilities or obligations of any nature other than those incident to
its formation and pursuant to this Agreement and the Merger and the other
transactions contemplated by this Agreement.
5.2. ORGANIZATION, GOOD STANDING AND QUALIFICATION.
Parent is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and each of its
Subsidiaries is a corporation or other entity duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization. Each of Parent and each of its Subsidiaries has all requisite
corporate or similar power and authority to own and operate its properties and
assets and to carry on its business as presently conducted and is qualified to
do business and is in good standing in each jurisdiction where the ownership or
operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing,
when taken together with all other such failures, is not reasonably likely to
have a Parent Material Adverse Effect. Parent has made available to the Company
a complete and correct copy of Parent's charter and by-laws, each as amended to
and as in effect as of the date hereof.
5.3. CAPITALIZATION.
The authorized stock of Parent consists of 75 million shares
of Parent Common Stock, of which 23,437,176 shares were outstanding as of the
close of business on May 24, 2000, and 5 million shares of Preferred Stock, par
value $.01 per share (the "Parent Preferred Shares" and together with Parent
Common Stock, the "Parent Shares"), of which no shares were outstanding as of
the close of business on the date hereof. All of the outstanding Parent Shares
have been duly authorized and are validly issued, fully paid and
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nonassessable. Parent has no commitments to issue or deliver Parent Shares,
except that, as of May 24, 2000, there were 3,688,380 shares of Parent Common
Stock subject to issuance pursuant to Parent's 1993 and 1998 Employee Share
Option and Restricted Share Plans, Parent's Directors Option Plan, and
agreements with consultants (the "Parent Stock Plans"), up to 700,000 shares
issuable under outstanding warrants held by Amgen Inc., and 300,000 shares of
Parent Preferred Stock subject to issuance pursuant to the Parent Rights
Agreement and other commitments to issue shares described in the Parent Reports.
Each of the outstanding shares of capital stock or other securities of each of
Parent's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned by Parent or a direct or indirect wholly-owned
subsidiary of Parent, free and clear of any lien, pledge, security interest,
claim or other encumbrance. Except as described in this SECTION 5.3, the Parent
Reports or in SECTION 5.3 of the Parent Disclosure Schedule, there are no
preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other securities of Parent or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, any securities of Parent or any of
its Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. Parent does not have outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or, except as referred to in this SECTION 5.3, convertible into or
exercisable for securities having the right to vote) with the stockholders of
Parent on any matter.
5.4. AUTHORITY; APPROVAL AND FAIRNESS.
(a) Each of Parent and Merger Subsidiary has all requisite
corporate power and authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this Agreement and,
with respect to Parent, subject only to approval of the issuance of Parent
Common Stock by the holders of at least a majority of the total votes cast on
the proposal in person or by proxy (the "Parent Requisite Vote"), to consummate
the Merger. This Agreement is a valid and binding obligation of each of Parent
and Merger Subsidiary, as the case may be, enforceable against Parent and Merger
Subsidiary in accordance with its terms, except as enforceability may be limited
or affected by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws and equitable principles now or hereafter in
effect and affecting the rights and remedies of creditors generally.
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(b) The Board of Directors of Parent, at a meeting duly called
and held, by unanimous vote (i) has approved this Agreement and the Merger and
the other transactions contemplated hereby and thereby and (ii) has resolved to
submit the proposed issuance of Parent Common Stock in the Merger to, and
recommend approval thereof by, the stockholders of the Company. The Board of
Directors of Parent has received the opinion of its financial advisor,
Prudential Vector Healthcare Group, to the effect that, as of the date of such
opinion, the Merger Consideration is fair from a financial point of view to
Parent.
5.5. GOVERNMENTAL FILINGS; NO VIOLATIONS.
(a) Other than the filings and/or notices pursuant to or
required by (i) SECTION 1.3 hereof, (ii) the HSR Act, and Applicable Foreign
Competition Laws, (iii) the Exchange Act, (iv) the Securities Act, (v) state
securities or "blue-sky" laws, (vi) Section 251 of the DGCL and (vii) Nasdaq,
the execution and delivery of this Agreement by Parent and Merger Subsidiary and
the consummation by Parent and Merger Subsidiary of the Merger and the other
transactions contemplated hereby do not require any filings, notices, consents
or approvals with or by any Court, administrative agency, commission, government
or regulatory authority, domestic or foreign, except those that the failure to
make or obtain would not, individually or in the aggregate, be reasonably likely
to have a Parent Material Adverse Effect or prevent, materially delay or
materially impair the ability of Parent or Merger Subsidiary to consummate
transactions contemplated by this Agreement.
(b) Subject to compliance with the filings described in
SECTION 5.5(a) and obtaining Private Consents applicable to the Parent and its
Subsidiaries, the execution, delivery and performance of this Agreement by
Parent and the Merger Subsidiary does not, and the consummation by Parent or
Merger Subsidiary of the Merger and the other transactions contemplated hereby
will not, constitute or result in (i) a breach or violation of, or a default
under, the certificate of incorporation or by-laws of Parent or of Merger
Subsidiary, or the comparable governing instruments of any of Parent's other
Subsidiaries, (ii) a breach or violation of, or a default under, the
acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of Parent or any of its Subsidiaries
(with or without notice, lapse of time or both) pursuant to, any Contracts
binding upon Parent or any of its Subsidiaries, (iii) any change in the rights
or obligations of any party under any of those Contracts, (iv) any conflict with
or violation of any Laws (including any Takeover Laws of the State of Maryland,
if any, applicable to acquirors whose principal place of business is in the
State of Maryland) that would impair Parent's or any of Parent's Subsidiaries'
business or their ability to consummate the transactions contemplated by this
Agreement or adversely
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affect any licenses or approvals necessary to enable Parent and its Subsidiaries
to carry on their business as presently conducted, except, in the case of
clauses (ii), (iii) or (iv), for any conflict, breach, violation, default,
acceleration, declaration, imposition or impairment that would not be reasonably
likely to have a Parent Material Adverse Effect or prevent, materially delay or
materially impair the ability of Parent or Merger Subsidiary to consummate the
transactions contemplated by this Agreement.
5.6. PARENT REPORTS; FINANCIAL STATEMENTS.
Parent has delivered or made available to the Company each
registration statement, report, proxy statement or information statement
prepared by it since December 31, 1999 (the "Parent Audit Date"), including (a)
Parent's Annual Report on Form 10-K for the year ended December 31, 1999 (b)
Parent's Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2000 and (c) Parent's definitive Proxy Statement for its 2000 Annual Meeting of
Stockholders, each in the form (including exhibits, annexes and any amendments
thereto) filed with the SEC (collectively, including any such reports filed
subsequent to the date hereof, the "Parent Reports"). As of their respective
dates, the Parent Reports complied, and any Parent Reports filed with the SEC
subsequent to the date hereof will comply, as to form in all material respects
with the requirements of the Securities Act or the Exchange Act, as applicable,
and the rules and regulations of the SEC. As of their respective dates, the
Parent Reports did not, and any Parent Reports filed with the SEC subsequent to
the date hereof will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. Each of the consolidated balance sheets included in
or incorporated by reference into the Parent Reports (including the related
notes and schedules) fairly presents, or will fairly present, in all material
respects, the consolidated financial position of Parent and its Subsidiaries as
of its date and each of the consolidated statements of income and of changes in
financial position included in or incorporated by reference into the Parent
Reports (including any related notes and schedules) fairly presents, or will
fairly present, in all material respects, the consolidated results of
operations, retained earnings and changes in financial position, as the case may
be, of Parent and its Subsidiaries for the periods set forth therein (subject,
in the case of unaudited statements, to notes and normal year-end audit
adjustments), in each case in accordance with GAAP consistently applied during
the periods involved, except as may be noted therein.
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5.7. ABSENCE OF CERTAIN CHANGES.
Except as disclosed in the Parent Reports filed prior to the
date hereof or as set forth on SECTION 5.7 of the Parent Disclosure Schedule,
since the Parent Audit Date, Parent and its Subsidiaries have conducted their
respective businesses only in, and have not engaged in any material transaction
other than according to, the ordinary and usual course of such businesses and
there has not been: (a) any Parent Material Adverse Effect or other event, or
any other development or combination of developments of which the Responsible
Executive Officers of Parent have knowledge, that, individually or in the
aggregate, is reasonably likely to result in a Parent Material Adverse Effect;
(b) any material damage, destruction or other casualty loss with respect to any
material asset or property owned, leased or otherwise used by Parent or any of
its Subsidiaries, whether or not covered by insurance; (c) any authorization,
declaration, setting aside or payment of any dividend or other distribution in
respect of the stock of Parent, except as permitted by SECTION 6.2 hereof; (d)
any change by Parent in accounting principles, practices or methods other than
as required by changes in applicable GAAP; or (e) any repurchase or redemption
of any shares of Parent Common Stock.
5.8. LITIGATION AND LIABILITIES.
Except as disclosed in the Parent Reports filed prior to the
date hereof or as set forth on SECTION 5.8 of the Parent Disclosure Schedule,
there are no (a) civil, criminal or administrative actions, suits, claims,
hearings, investigations, proceedings, judgments, decrees, orders or injunctions
outstanding, pending or, to the knowledge of the Responsible Executive Officers
of Parent, threatened against Parent or any of its Subsidiaries or (b)
obligations or liabilities of any nature, whether or not accrued, contingent or
otherwise and whether or not required to be disclosed, or any other facts or
circumstances of which the Responsible Executive Officers have knowledge, that
have resulted in or could reasonably be expected to result in any claims
against, or obligations or liabilities of, Parent or any of its Subsidiaries,
except, in each case, for such actions, suits, claims, hearings, investigations,
proceedings, obligations and liabilities that would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect or
prevent or materially impair the ability of Parent or Merger Subsidiary to
consummate the transactions contemplated by this Agreement.
5.9. COMPLIANCE WITH LAWS; PERMITS.
Except as set forth in the Parent Reports filed prior to the
date hereof or on SECTION 5.9 of the Parent Disclosure Schedule, the businesses
of each of Parent and its Subsidiaries have not been, and are not being,
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conducted in violation of any Laws, except for violations or possible violations
that, individually or in the aggregate, do not or would not be reasonably likely
to have a Parent Material Adverse Effect or prevent or materially impair the
ability of Parent or Merger Subsidiary to consummate the transactions
contemplated by this Agreement. Except as set forth in the Parent Reports filed
prior to the date hereof or on SECTION 5.9 of the Parent Disclosure Schedule, no
investigation or review by any governmental entity with respect to Parent or any
of its Subsidiaries is pending or, to the knowledge of the Responsible Executive
Officers of Parent, threatened, nor has any governmental entity overtly
indicated to the Company an intention to conduct the same, except for those the
outcome would not, individually or in the aggregate, have a Parent Material
Adverse Effect or prevent or materially impair the ability of Parent or Merger
Subsidiary to consummate the transactions contemplated by this Agreement. Parent
and its Subsidiaries each has all permits, licenses, trademarks, patents, trade
names, copyrights, service marks, franchises, variances, exemptions, orders and
other governmental authorizations, consents and approvals necessary to conduct
its business as presently conducted except those the absence of which do not, or
would not be reasonably likely to, individually or in the aggregate, have a
Parent Material Adverse Effect or prevent or materially impair the ability of
Parent or Merger Subsidiary to consummate the Merger and the other transactions
contemplated by this Agreement.
5.10. ENVIRONMENTAL MATTERS.
Except as disclosed in the Parent Reports filed prior to the
date hereof or in SECTION 5.10 of the Parent Disclosure Schedule, and except for
such matters that, alone or in the aggregate, have not and would not be
reasonably likely to have a Parent Material Adverse Effect:
(a) Parent and its Subsidiaries have complied with all
applicable Environmental Laws;
(b) the properties currently owned or operated by Parent
(including soils, groundwater, surface water, buildings or other structures) are
not contaminated with any Hazardous Substances and, to the knowledge of the
Parent Responsible Executive Officers, do not contain wetlands, dumps, filled in
land, PCBs, asbestos or underground storage tanks;
(c) the properties formerly owned or operated by Parent or any
of its Subsidiaries were not contaminated with Hazardous Substances during the
period of ownership or operation by Parent or any of its Subsidiaries;
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(d) neither Parent nor any Subsidiary is subject to liability
for any Hazardous Substance disposal or contamination on any third party
property;
(e) no Hazardous Substance has been transported from any of
the properties owned or operated by Parent or any of its Subsidiaries other than
in compliance with applicable Environmental Law;
(f) neither Parent nor any of its Subsidiaries has received
any written notice, demand, letter, claim or request for information from any
Governmental Entity or third party indicating that Parent or any of its
Subsidiaries may be in violation of or liable under any Environmental Law;
(g) Parent and its Subsidiaries are not subject to any court
order, administrative order or decree arising under any Environmental Law and
are not subject to any indemnity or other agreement with any third party
relating to liability under any Environmental Law or relating to Hazardous
Substances; and
(h) to the knowledge of the Responsible Executive Officers of
the Parent there are no circumstances or conditions involving Parent or any of
its Subsidiaries that could reasonably be expected to result in any claims,
liability, investigations, costs or restrictions on the ownership, use, or
transfer of any property of Parent pursuant to any Environmental Law.
5.11. TAXES.
Except as disclosed in the Parent Reports filed prior to the
date hereof or as provided in SECTION 5.11 of the Parent Disclosure Schedule and
except for such matters that, alone or in the aggregate, would not be reasonably
likely to have Material Adverse Effect:
(a) Each of Parent, each of its Subsidiaries and any
affiliated, combined or unitary group of which any such corporation is or was a
member has (i) timely (taking into account any extensions) filed all federal
income tax and all other material federal and all material state, local and
foreign returns, declarations, reports, estimates, information returns and
statements ("Returns") required to be filed or sent by or with respect to it in
respect of any Taxes, (ii) timely paid all Taxes that are due and payable
(except for audit adjustments not material in the aggregate or to the extent
that liability therefor is reserved for in the Parent's most recent audited
financial statements) for which Parent or any of its Subsidiaries may be liable,
(iii) established reserves that are adequate for the payment of all Taxes not
yet due and payable with respect to the results of operations of Parent and its
Subsidiaries through the date hereof, and (iv) to the knowledge of the
Responsible Executive Officers of
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Parent or any Subsidiary of Parent, complied in all material respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes and has in all material respects timely withheld from employee wages
and paid over to the proper Taxing Authorities all amounts required to be so
withheld and paid over.
(b) (i) All federal income tax Returns of Parent and any of
its Subsidiaries have been examined by the IRS or otherwise closed; (ii) except
to the extent being contested in good faith, all material deficiencies asserted
as a result of such examinations and any examination by any applicable state or
local Taxing Authority have been paid, fully settled or adequately provided for
in Parent's most recent audited financial statements; (iii) no material federal,
state or local income or franchise tax audits or other administrative
proceedings or court proceedings are at present pending with regard to any
federal, state or local income or franchise Taxes for which Parent or any of its
Subsidiaries would be liable, and (iv) no material deficiency for any such
income or franchise Taxes has been proposed, asserted or assessed pursuant to
such examination against Parent or any of its Subsidiaries by any federal, state
or local taxing authority with respect to any period.
(c) Neither Parent nor any of its Subsidiaries has executed or
entered into (or prior to the close of business on the Closing Date will execute
or enter into) with any Taxing Authority (i) any agreement or other document
extending or having the effect of extending the period for assessments or
collection of any federal, state or local income or franchise Taxes for which
Parent or any of its Subsidiaries would be liable or (ii) a closing agreement
pursuant to Section 7121 of the Code, or any predecessor provision thereof or
any similar provision of state or local income tax law that relates to the
assets or operations of Parent or any of its Subsidiaries.
(d) Neither Parent nor any of its Subsidiaries has made an
election under Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by Parent or any of its
Subsidiaries.
(e) Neither Parent nor any of its Subsidiaries is a party to,
is bound by or has any material obligation under any tax sharing agreement or
similar agreement or arrangement.
5.12. INTELLECTUAL PROPERTY.
(a) To the knowledge of the Responsible Executive Officer of
the Parent, except as disclosed in Parent Reports prior to the date hereof or as
set forth on SECTION 5.12 of the Parent Disclosure Schedule, Parent and/or each
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of its Subsidiaries owns, or is licensed or otherwise possesses legally
enforceable rights in all material patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, technology, know-how, computer
software programs or applications, and tangible or intangible proprietary
information or materials that are used in the business of Parent and its
Subsidiaries as currently conducted, and all patents, trademarks, trade names,
service marks and copyrights held by Parent and/or its Subsidiaries are valid
and subsisting.
(b) To the knowledge of the Responsible Executive Officer of
the Parent, except as disclosed in the Parent Reports filed prior to the date
hereof or SECTION 5.12 of the Parent Disclosure Schedule and except for such
matters that, alone or in the aggregate, would not be reasonably likely to have
a Parent Material Adverse effect:
(i) Parent is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder or as contemplated hereby, in violation of any licenses, sublicenses
and other agreements as to which Parent is a party and pursuant to which it has
been granted proprietary rights to use any third-party patents, trademarks,
service marks, trade secrets and copyrights ("Parent Third-Party Intellectual
Property Rights");
(ii) no claims with respect to (a) the patents,
registered and unregistered trademarks and service marks, copyrights, trade
names, and any applications therefor owned by Parent or any its Subsidiaries
(the "Parent Intellectual Property Rights"); (b) any trade secret material to
Parent; or (c) Parent Third-Party Intellectual Property Rights are currently
pending or, to the knowledge of the Responsible Executive Officers of Parent,
are threatened by any Person;
(iii) (a) the sale, licensing or use of any product
as now used, sold or licensed or proposed for use, sale or license by Parent or
any of its Subsidiaries, does not infringe on any copyright, patent, trademark,
service xxxx or trade secret of any other Person; and (b) there are no valid
grounds for any claims against the use by Parent or any of its Subsidiaries, of
any trademarks, trade names, trade secrets, copyrights, patents, technology or
know-how used in the business of Parent or any of its Subsidiaries as currently
conducted or as proposed to be conducted, challenging the ownership, validity or
effectiveness of any of Parent Intellectual Property Rights or other trade
secret material to Parent, or challenging the license or legally enforceable
right to use of the Parent Third-Party Intellectual Rights by Parent or any of
its Subsidiaries; and
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(iv) there is no unauthorized use, infringement or
misappropriation of any of Parent Intellectual Property Rights by any third
party, including any employee or former employee of Parent or any of its
Subsidiaries.
(c) Substantially all officers, employees and consultants of
Parent who have access to trade secrets or other proprietary intellectual
property owned by the Parent and not otherwise protected by a patent, a patent
application, copyright, trademark, or other registration ("Parent Confidential
Information") have executed and delivered to Parent an agreement regarding the
protection of proprietary information and the assignment to Parent of any
Intellectual Property arising from services performed for Parent by such
persons.
(d) Parent has obtained or entered into written agreements
with third parties in connection with the disclosure to, or use or appropriation
by, third parties, of any Parent Confidential Information, and the Responsible
Executive Officers of Parent do not know of any situation involving third party
use, disclosure or appropriation of Parent Confidential Information where the
lack of such a written agreement is likely to result in any Parent Material
Adverse Effect.
5.13. BROKERS AND FINDERS.
Neither Parent nor any of its executive officers, directors or
employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with the Merger or the
other transactions contemplated in this Agreement, except that Parent has
employed Prudential Vector Healthcare Group as its financial advisors, the
financial arrangements with which have been fully disclosed to the Company prior
to the date hereof.
5.14. ACCOUNTING AND TAX MATTERS.
(a) As of the date hereof, neither Parent nor any of its
Affiliates has taken or agreed to take any action, nor do the Responsible
Executive Officers of Parent have any knowledge of any fact or circumstance,
that would prevent Parent or the Company from accounting for the business
combination to be effected by the Merger as a "pooling-of-interests" or prevent
the Merger and the other transactions contemplated by this Agreement from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code.
(b) Parent has provided to the Company and Parent's
independent accountants all information concerning actions taken or agreed to be
taken by Parent or any of its Affiliates on or before the date of this
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Agreement that could reasonably be expected to affect the ability of Parent to
account for the business combination to be effected by the Merger as a pooling
of interests.
(c) To the knowledge of the Responsible Executive Officers of
Parent, Parent is not the subject of any formal or informal inquiry or
investigation by the SEC except for routine matters relating to the review of
Parent Reports by the SEC Division of Corporation Finance.
5.15. LABOR MATTERS.
Neither Parent nor any of its Subsidiaries is a party to or
otherwise bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization. There are
no strikes or work stoppages in effect or, to the knowledge of the Responsible
Executive Officers of Parent, threatened with respect to the employees of Parent
or any of its Subsidiaries. There is no representation claim or petition or
material complaint pending before the National Labor Relations Board or any
state or local labor agency and, to the knowledge of the Responsible Executive
Officers of Parent, no question concerning representation has been raised or
threatened. No charges with respect to or relating to the business of Parent or
any of its Subsidiaries are pending before the Equal Opportunity Commission, or
any state or local agency responsible for the prevention of unlawful employment
practices, which would if adversely determined be reasonably likely to have a
Parent Material Adverse Effect.
5.16. TITLE TO PROPERTY.
Except as set forth in the Parent Reports or on SECTION 5.16
of the Parent Disclosure Schedule, Parent and each of its Subsidiaries have good
and indefeasible title to all of their material properties and assets, free and
clear of all encumbrances, except liens for taxes not yet due and payable and
such encumbrances or other imperfections of title, if any, as do not materially
detract from the value of or interfere with the present use of the property
affected thereby or which would not be reasonably likely to have a Parent
Material Adverse Effect, and except for encumbrances which secure indebtedness
reflected in the financial statements included in the Parent Reports.
5.17. MATERIAL CONTRACTS.
All of the Material Contracts of Parent and its Subsidiaries
that are required to be described in the Parent Reports or to be filed as
exhibits thereto are described in the Parent Reports or filed as exhibits
thereto and are in full force and effect. Neither the Parent nor any of it
Subsidiaries nor, to the
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knowledge of the Responsible Executive Officers of Parent, any other party is in
breach of or in default under any such Material Contract except for such
breaches and defaults as individually or in aggregate have not had and would not
be reasonably likely to have a Parent Material Adverse Effect. Neither the
Parent nor any of its Subsidiaries is party to any agreement containing any
provision or covenant which purports to limit in any material respect the manner
in which, or the localities in which, all or any substantial portion of the
business of the Company and its Subsidiaries, taken as a whole, is or would be
conducted.
5.18. PARENT EMPLOYMENT ARRANGEMENTS
Each material compensation arrangement established or
maintained by Parent or any of its Subsidiaries for its employees (including any
material employment, severance, bonus, deferred compensation, equity incentive
or other similar agreement, plan or arrangement) is described in the Parent
Reports or on SECTION 5.18 of the Parent Disclosure Schedule, and a copy of each
such material compensation arrangement has been made available to the Company
prior to the date hereof.
ARTICLE VI
COVENANTS
6.1. INTERIM OPERATIONS OF THE COMPANY.
The Company covenants and agrees as to itself and its Subsidiaries
that, after the date hereof and prior to the Effective Time (except as otherwise
expressly contemplated by this Agreement or as set forth in SECTION 6.1 of the
Company Disclosure Schedule), without the prior written consent of Parent:
(a) its and its Subsidiaries' businesses shall be conducted in all
material respects in the ordinary and usual course (it being understood and
agreed that nothing contained herein shall permit the Company to enter into or
engage (through acquisition, product extension or otherwise), in any material
respect, in any new line of business);
(b) to the extent consistent with (a) above, it and its Subsidiaries
shall use their reasonable best efforts to preserve their business organization
intact and maintain its existing relations and goodwill with customers,
suppliers, distributors, creditors, lessors, employees and business associates;
(c) it shall not (i) issue, sell, pledge, dispose of or encumber any
capital stock owned by it in any of its Subsidiaries; (ii) amend its certificate
of incorporation or by-laws or amend, modify or terminate the Company Rights
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Agreement; (iii) split, combine or reclassify its outstanding shares of stock;
(iv) authorize, declare, set aside or pay any dividend payable in cash, stock or
property in respect of any capital stock; (v) repurchase, redeem or otherwise
acquire, or permit any of its Subsidiaries to purchase or otherwise acquire, any
shares of its stock or any securities convertible into or exchangeable or
exercisable for any shares of its stock; or (vi) take any action inconsistent
with carrying out the Merger as promptly as possible except for those actions
expressly permitted by this Agreement (including SECTION 6.4 hereof);
(d) neither it nor any of its Subsidiaries shall: (i) except
as permitted under SECTION 6.1(e), issue, sell, pledge, dispose of or encumber
any (A) shares of, or securities convertible into or exchangeable or exercisable
for, or options, warrants, calls, commitments or rights of any kind to acquire
any shares of, its capital stock of any class or (B) securities convertible into
or exchangeable for any other property or assets (other than Shares issuable
pursuant to options outstanding on the date hereof under any of the Company
Stock Plans); (ii) other than in the ordinary and usual course of business,
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of its
Subsidiaries) or take any action to incur or modify any material indebtedness or
other material liability; (iii) make or authorize or commit for any capital
expenditures other than in amounts less than $1 million in the aggregate; or
(iv) make any acquisition of, or investment in, the assets or stock of any other
Person or entity (other than a Subsidiary) except for ordinary course investment
activities or as otherwise permitted by SECTION 6.1;
(e) neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards under, amend or
otherwise modify, any Company Compensation and Benefit Plans or increase the
salary, wage, bonus or other compensation of any employees except increases for
employees of the Company occurring in the ordinary and usual course of business
(which shall be limited to (i) regular annual grants of options under the
Company Stock Plans, the number of Company Options subject to and the recipient
of each such grant to be determined in consultation with Parent; provided that
the vesting of such options shall not accelerate as a result of the change in
control contemplated by the Merger and provided, further, that the maximum
number of Shares issuable pursuant to such options shall be calculated in
accordance with past practice and the terms of the Company Stock Plans and shall
not exceed 10,000 Shares, (ii) grants and payment of awards under any management
incentive plans in accordance with the terms of such plans and (iii) salary
increases for those employees who have a rank of vice president or higher in
accordance with the Company's normal salary guidelines and annual salary pool
which, in the aggregate, do not exceed 5% of their aggregate current salaries,
and salary
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increases for other employees which do not exceed, in the aggregate, 5% of their
aggregate current salaries) and except reasonable retention arrangements which
are necessary for the operation of the Company entered into with the prior
written consent of Parent;
(f) neither it nor any of its Subsidiaries shall pay, discharge,
settle or satisfy any claims, liabilities or obligations except (i) in the
ordinary course of business in amounts that are not material or (ii) ordinary
course repayment of indebtedness or payment of contractual obligations when due;
(g) neither it nor any of its Subsidiaries shall make or change any
Tax election, settle any material audit or file any amended tax returns;
(h) neither it nor any of its Subsidiaries shall enter into any
agreement containing any provision or covenant limiting in any material respect
the ability of the Company or any Subsidiary or affiliate to (i) sell any
products or services of or to any other person, (ii) engage in any line of
business or (iii) compete with or to obtain products or services from any person
or limiting the ability of any person to provide products or services to the
Company or any of its Subsidiaries or Affiliates;
(i) neither it nor any of its Subsidiaries shall take any action that
would cause any of its representations and warranties herein to become untrue in
any material respect; and
(j) neither it nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
6.2. INTERIM OPERATIONS OF PARENT.
Parent covenants and agrees as to itself and its Subsidiaries that,
after the date hereof and prior to the Effective Time (except as otherwise
expressly contemplated by this Agreement or as set forth in SECTION 6.2 of the
Parent Disclosure Schedule), without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed:
(a) it shall not (i) amend its certificate of incorporation or
by-laws in a manner that would adversely affect the rights of shareholders or
(ii) authorize, declare or pay any cash dividends on Parent's outstanding shares
of common stock;
(b) it will not issue or sell any shares of, or securities
convertible into or exchangeable or exerciseable for, or options, warrants,
calls, commitments or rights of any kind to acquire shares of, its capital stock
except for those issuances or sales under or in connection with Parent Stock
Plans
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existing on the date hereof, other commitments to issue shares in effect on the
date hereof referred to in SECTION 5.3 and corporate or strategic partnerships,
acquisitions, capital-raising activities, financings, and other transactions
that do not exceed an aggregate of 2.3 million shares;
(c) neither it nor any of its Subsidiaries shall take any action that
would cause any of its representations and warranties herein to become untrue in
any material respect; and
(d) neither it nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
6.3. INTERIM OPERATIONS OF MERGER SUBSIDIARY.
During the period from the date of this Agreement to the Effective
Time, Merger Subsidiary shall not engage in any activities of any nature except
as provided in or contemplated by this Agreement.
6.4. ACQUISITION PROPOSALS.
From the date hereof until the termination of this Agreement and
except as expressly permitted by the following provisions of this SECTION 6.4,
neither the Company nor any of its Subsidiaries will, directly or indirectly,
initiate, solicit, induce or encourage or otherwise facilitate any inquiries or
the making of any proposal or offer (other than the Merger) with respect to a
merger, reorganization, share exchange, tender offer, exchange offer,
consolidation, liquidation or similar transaction involving the Company or its
Subsidiaries, as the case may be, or any purchase of 10% or more of their
respective assets or equity securities (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"). The Company will not, and
will not permit or cause any of its Subsidiaries or any of the officers and
directors of it or its Subsidiaries to, and shall direct and use its best
efforts to cause its and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, directly or indirectly, initiate, solicit, induce
or encourage or otherwise facilitate any inquiries with respect to or the making
of any Acquisition Proposal, or engage in any negotiations concerning an
Acquisition Proposal, or provide any confidential information or data to, or
have any discussions with, any Person relating to an Acquisition Proposal,
whether made before or after the date of this Agreement, or otherwise
intentionally facilitate any effort or attempt to make or implement an
Acquisition Proposal (including, without limitation, by means of an amendment to
the Company Rights Agreement); provided, however, that nothing contained in this
Agreement shall prevent the Company or its Board of Directors from complying
with Rules 14d-
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9 and 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal or at any time prior to the time the Merger has been approved by the
Company Requisite Vote from: (a) providing information in response to a request
therefor by a Person who has delivered to the Board of Directors of the Company
an unsolicited bona fide written Acquisition Proposal if the Board of Directors
of Company receives from the Person so requesting such information an executed
confidentiality agreement the terms of which are (without regard to the terms of
the Acquisition Proposal) (i) no less favorable to the Company and (ii) no less
restrictive on the Person requesting such information than those contained in
the Confidentiality Agreement (as defined in SECTION 9.7); or (b) engaging in
negotiations or discussions with a Person who has delivered to the Board of
Directors of the Company an unsolicited bona fide written Acquisition Proposal;
if, and only to the extent that, in each such case referred to in clause (a) or
(b) above, (x) the Board of Directors of the Company determines in good faith
(based on the advice of its financial advisor and outside legal counsel) that
the Acquisition Proposal, if accepted, is likely to be consummated and (y) the
Board of Directors of the Company determines in good faith (based on advice of
its financial adviser) that the Acquisition Proposal would, if consummated,
result in a transaction that is more favorable to the Company's stockholders
(with respect to financial terms and, if applicable, strategic benefit, taking
into account the long-term value to stockholders of the Merger Consideration and
the strategic nature of the proposed Merger) than the Merger (any Acquisition
Proposal as to which such determinations are made being referred to in this
Agreement as a "Superior Proposal"). The Company will as promptly as reasonably
possible notify the Parent if after the date hereof any such inquiries,
proposals or offers are received by, any such information is requested from, or
any such discussions or negotiations are sought to be initiated or continued
with, the Company or its representatives indicating, in connection with such
notice, the name of such Person and the material terms and conditions of any
proposals or offers and thereafter shall keep the Parent informed, on a current
basis, on the status and terms of any such proposals or offers and the status of
any such negotiations or discussions. Nothing in this SECTION 6.4 shall permit
the Company to enter into any agreement, orally or in writing, with respect to
an Acquisition Proposal during the term of this Agreement (other than a
confidentiality agreement as described above). The Company shall immediately
cease and shall instruct its representatives to immediately cease all existing
activities, discussions or negotiations with any other parties with respect to
any possible Acquisition Proposal.
6.5. INFORMATION SUPPLIED.
Each of the Company and Parent agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it or
its
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Subsidiaries for inclusion or incorporation by reference in (a) the Registration
Statement on Form S-4 to be filed with the SEC by Parent in connection with the
issuance of shares of Parent Common Stock in the Merger (including the joint
proxy statement and prospectus (the "Prospectus/Proxy Statement") constituting a
part thereof) (the "S-4 Registration Statement") will, 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 to make the statements therein, not
misleading, and (b) the Prospectus/Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders and at the times
of the meetings of stockholders of the Company and Parent to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
6.6. STOCKHOLDERS MEETINGS.
Whether or not the Board of Directors of the Company shall take any action
permitted by the third sentence of this SECTION 6.6, the Company shall cause a
meeting of its stockholders (the "Company Stockholders Meeting") to be duly
called and held as soon as practicable after the date of this Agreement for the
purpose of voting on the adoption of this Agreement. The Board of Directors of
the Company shall (i) include in the Proxy Statement/Prospectus its
recommendation in favor of adoption of the Merger Agreement (the "Company Board
Recommendation") and the written opinion of XX Xxxxx Securities Corporation,
dated the date of this Agreement, to the effect that, as of the date hereof, the
Merger Consideration is fair, from a financial point of view, to the holders of
Company Common Stock and (ii) use its reasonable best efforts to obtain the
necessary vote in favor of the adoption of this Agreement by its stockholders.
The Board of Directors of the Company shall not withdraw, amend, modify or
qualify in a manner adverse to Parent the Company Board Recommendation (or
announce publicly its intention to do so), except that, prior to the receipt of
the Company Requisite Vote, the Board of Directors of the Company shall be
permitted to withdraw, amend, modify or materially qualify in a manner adverse
to Parent the Company Board Recommendation (or publicly announce its intention
to do so), following three business days' prior notice to Parent, but only if
(A) the Company has complied in all respects with this Agreement, including
SECTION 6.4, and (B) after receiving advice of its outside legal counsel, the
Company Board of Directors determines in good faith that the Merger is not in
the best interests of the stockholders of the Company and that, therefore, it is
required to withdraw, amend or modify the Company Board Recommendation in order
to satisfy its fiduciary duties to the stockholders of the Company under
applicable law.
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Parent shall cause a meeting of its stockholders (the "Parent Stockholders
Meeting"), to be to be called and held as soon as practicable after the date of
this Agreement, for the purpose of voting upon the approval of the issuance of
Parent Common Stock in the Merger, and Parent's Board of Directors will
recommend such approval by its stockholders and Parent will use its reasonable
best efforts to obtain the necessary vote in favor of the issuance of the Parent
Common Stock in the Merger (provided that Parent's Board of Directors may
withdraw, amend or modify its recommendation if, after receiving advice of its
outside legal counsel, the Parent Board of Directors determines in good faith
that the Merger is not in the best interests of the stockholders of the Company
and that, therefore, it is required to withdraw, amend or modify its
recommendation in order to satisfy its fiduciary duties to stockholders under
applicable law).
6.7. FILINGS; OTHER ACTIONS; NOTIFICATION.
(a) Parent shall (with the cooperation of the Company) prepare and
file with the SEC the S-4 Registration Statement as promptly as practicable.
Parent and the Company each shall use its reasonable best efforts to have the
S-4 Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing, and promptly thereafter mail the
Prospectus/Proxy Statement to the respective stockholders of each of the Company
and Parent.
(b) The Company and Parent each shall from the date hereof until the
Effective Time cooperate with the other and use (and shall cause their
respective Subsidiaries to use) its reasonable best efforts to cause to be done
all things, necessary, proper or advisable on its part under this Agreement and
applicable Laws to consummate and make effective the Merger and the other
transactions contemplated by this Agreement as soon as practicable, including
preparing and filing as promptly as practicable all documentation to effect all
necessary notices, reports and other filings and to obtain as promptly as
practicable all consents, registrations, approvals, permits and authorizations
necessary or advisable to be obtained from any third party and/or any
governmental entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement; provided, however, that nothing in
this SECTION 6.7 shall require, or be construed to require, Parent, in
connection with the receipt of any regulatory approval, to proffer to, or agree
to (i) sell or hold separate and agree to sell or to discontinue or limit,
before or after the Effective Time, any assets, businesses, or interest in any
assets or businesses of Parent, the Company or any of their respective
Affiliates (or to consent to any sale, or agreement to sell, or discontinuance
or limitation by the Company of any of its assets or businesses) or (ii) agree
to any conditions relating to, or changes or restrictions in, the operations of
any such assets or
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46
businesses which, in either case would be reasonably expected to materially and
adversely impact the economic or business benefits to Parent of the transactions
contemplated by this Agreement. Subject to applicable laws relating to the
exchange of information, Parent and the Company shall have the right to review
in advance, and to the extent practicable each will consult the other on, all
the information relating to Parent or the Company, as the case may be, and any
of their respective Subsidiaries, that appear in any filing made with, or
written materials submitted to, any third party and/or any governmental entity
in connection with the Merger and the other transactions contemplated by this
Agreement. In exercising the foregoing right, each of the Company and Parent
shall act reasonably and as promptly as practicable.
(c) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, executive officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Prospectus/ Proxy
Statement, the S-4 Registration Statement or any other statement, filing, notice
or application made by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any third party and/or any governmental entity in
connection with the Merger and the transactions contemplated by this Agreement.
6.8. TAXATION AND ACCOUNTING.
Neither Parent nor the Company shall, nor shall they permit any of
their respective Subsidiaries or, to the extent within their control, Affiliates
to, take or cause to be taken any action, whether before or after the Effective
Time, that would disqualify the Merger as a "pooling of interests" for
accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code. Each of Parent and the Company agrees to use its reasonable
best efforts to cure any impediment to the qualification of the Merger as a
"pooling of interests" for accounting purposes or as a "reorganization" within
the meaning of Section 368(a) of the Code.
6.9. ACCESS.
Upon reasonable notice, and except as may otherwise be required by
applicable law, each of Parent and the Company shall (and shall cause its
Subsidiaries to) afford the other party's officers, employees, counsel,
accountants and other authorized representatives ("Representatives") access,
during normal business hours throughout the period prior to the Effective Time,
to its properties, books, contracts and records and, during such period, shall
(and shall cause its Subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as may
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reasonably be requested, provided that no investigation pursuant to this Section
shall affect or be deemed to modify any representation or warranty made by the
Parent or Company, and provided, further, that the foregoing shall not require
the Parent or Company to permit any inspection, or to disclose any information,
that (i) in the reasonable judgment of the Parent or Company would result in the
disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality if the Parent or Company shall have
used all reasonable efforts to obtain the consent of such third party to such
inspection or disclosure or (ii) would violate any attorney-client privilege of
the Parent or Company. All requests for information made pursuant to this
SECTION 6.9 shall be directed to such Person as may be designated by the Parent
or Company pursuant to SECTION 9.6 hereof. All such information shall be
governed by the terms of the Confidentiality Agreement (as hereinafter defined).
6.10. AFFILIATES.
(a) Attached hereto as EXHIBIT A-1 is a list of names and addresses
of those Persons who are, in the opinion of the Company (after consultation with
outside legal counsel), "Affiliates" of the Company within the meaning of Rule
145 under the Securities Act and for the purposes of applicable interpretations
regarding the pooling-of-interests method of accounting. The Company has
delivered or shall deliver or cause to be delivered to Parent, at least 45 days
prior to the Effective Time, from each affiliate of the Company identified in
the foregoing list, and any other person who Parent or the Company reasonably
believes is an Affiliate of the Company, a letter in the form attached as
EXHIBIT A-2 (the "Company Affiliates Letter"). The certificates representing
Parent Common Stock received by such Affiliates shall bear a customary legend
regarding applicable Securities Act restrictions and restrictions relating to
pooling of interests applicable to Company Affiliates.
(b) In order to preserve pooling-of-interests accounting treatment
for the Merger, the Company shall be entitled, with regard to Shares held by a
Person deemed by the Company to be an "Affiliate" of the Company (within the
meaning of Rule 145 under the Securities Act and for purposes of applicable
interpretations regarding the pooling-of-interests method of accounting, and
regardless of whether or not such person is listed on EXHIBIT A-1), and Parent
shall be entitled, with regard to shares of Parent Common Stock to be issued
pursuant to the terms of this Agreement to a person deemed by parent to be an
Affiliate of the Company (under the definition given above), to place
appropriate legends on the certificates for such Shares or shares of Parent
Common Stock, as the case may be, and to issue appropriate stock transfer
instructions to the transfer agent for the Shares or the Parent Common Stock, as
the case may be, and shall be entitled to impose restrictions
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on any such Shares or shares of Parent Common Stock, to the effect that such
Shares or shares of Parent Common Stock may only be sold, transferred or
otherwise conveyed, and the holder thereof may only reduce his interest in or
risks relating to such Shares or shares of Parent Common Stock, pursuant to an
effective registration statement under the Securities Act or in accordance with
the provisions Rule 145(d) promulgated under the Securities Act or pursuant to
an exemption from registration under the Securities Act and, in any event, only
after financial results covering at least 30 days of combined operations of the
Company and Parent after the Effective Time shall have been published. The
foregoing restrictions relating to the transferability of the shares of Parent
Common Stock to be issued to any deemed Affiliate pursuant to this Agreement
shall apply to all purported sales, transfers and other conveyances of such
shares of Parent Common Stock and to all purported reductions in the interest in
or risks relating to such shares of Parent Common Stock, whether or not such
deemed Affiliate has exchanged the certificates previously evidencing such
deemed Affiliate's Shares for certificates evidencing shares of Parent Common
Stock into which such Shares were converted, and whether or not such deemed
Affiliate has executed and delivered a Company Affiliates Letter.
6.11. PUBLICITY.
The Company and Parent shall consult with each other prior to
issuing, and will provide each other with a meaningful opportunity to review,
comment upon and concur with, any press releases or otherwise making public
announcements with respect to the Merger and the other transactions contemplated
by this Agreement, and prior to making any filings with any third party and/or
any governmental entity with respect thereto, except as may be required by law,
court process or by obligations pursuant to any listing agreement with or rules
of any national securities exchange or interdealer quotation service.
6.12. BENEFITS.
(a) STOCK OPTIONS.
(i) At the Effective Time, Parent shall assume each Company
Option in accordance with the terms of the relevant Company Stock Plan under
which it was issued and the stock option agreement by which it is evidenced,
provided that the assumed option shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such Company
Option, a number of shares of Parent Common Stock equivalent to (A) the number
of Shares that could have been purchased immediately prior to the Effective Time
under such Company Option multiplied by (B) the
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Exchange Ratio (rounded down to the nearest whole number), at a price per share
of Parent Common Stock (rounded up to the nearest whole cent) equal to (A) the
exercise price for each Share otherwise purchasable pursuant to such Company
Option divided by (B) the Exchange Ratio; provided, however, that the foregoing
provisions shall be subject to such adjustments as are necessary in order to
satisfy the requirements of Section 424(a) of the Code in the case of any
Company Option to which Section 422 of the Code applies. At or prior to the
Effective Time, the Company shall make all necessary arrangements with respect
to the Company Stock Plans to permit the assumption of the unexercised Company
Options by Parent pursuant to this SECTION 6.12, including, to the extent
required by the terms of the Company Stock Plans or the Company Options,
obtaining the written consent of the holders of the Company Options.
(ii) At or prior to the Effective Time, Parent shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of Parent Common Stock for delivery upon exercise of Company Options assumed by
it in accordance with this Section. As soon as practicable after the Effective
Time, Parent shall file a registration statement on Form S-8 (or any successor
or other appropriate forms) (or shall cause such Company Option to be deemed to
be issued pursuant to a Parent Stock Plan for which shares of Parent Common
Stock have previously been registered pursuant to an appropriate registration
form) with respect to Parent Common Stock subject to such Company Options.
(b) EMPLOYEE BENEFITS.
(i) Parent agrees that, from the Effective Time the employees
of the Company and its Subsidiaries who remain in the employ of the Company and
its Subsidiaries or the Parent and its Subsidiaries will be provided with
benefits under employee benefit plans of the Parent and its Subsidiaries that
are no less favorable in the aggregate than those benefits provided by the
Parent and its Subsidiaries to their other similarly situated employees.
Following the Effective Time, Parent shall honor, or shall cause the Surviving
Company to honor, all individual employment or severance agreements in effect
for employees (or former employees) of the Company as of the date hereof to the
extent that such individual agreements are in effect by their terms following
the Effective Time and are listed in SECTION 6.12(b) of the Company Disclosure
Schedule. Nothing contained herein shall prevent Parent from amending or
terminating any employee benefit plan or agreement in accordance with its terms.
(ii) Immediately following the Effective Time, Parent shall
cause the Company to continue the employment of each individual who was
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employed by the Company and its Subsidiaries immediately prior to the Effective
Time for a period of time at least equal to each such individual's Transition
Period under the Company's Retention Bonus Program that is described in SECTION
6.1 of the Company Disclosure Schedule (or pay following such individual's
involuntary termination of employment other than for any of cause, death or
permanent disability in accordance with Parent's disability plan generally
available to its employees, any amounts that would otherwise be owed such
employee if such employee remained in the Surviving Company's employ through the
relevant Transition Period) at a salary level at least as high as that set forth
in the list set forth in SECTION 4.13 of the Company Disclosure Schedule (or the
salary level at which such employee started employment if hired between the date
hereof and the Effective Time). Immediately following the Effective Time, Parent
shall cause the Surviving Company to enter into and honor (x) the letter
agreement attached as EXHIBIT B-1 with the party so named in such agreement; (y)
the change in control severance agreement attached as EXHIBIT B-2 with the party
so named in such agreement (if such party is not otherwise a party to a change
of control severance agreement with the Company that survives the Effective
Time); (z) a letter agreement, in the form attached as EXHIBIT B-3, with each of
the parties listed on EXHIBIT B-4 attached hereto; and (xx) a change in control
severance agreement, in the form attached as EXHIBIT B-5, with each of the
parties listed on EXHIBIT B-4 attached hereto (if such party is not otherwise a
party to a change of control severance agreement with the Company that survives
the Effective Time). In addition, Parent agrees that, from the Effective Time,
Parent shall provide or shall cause the Surviving Company to provide severance
pay benefits to employees of the Surviving Company in accordance with the
severance pay guidelines of Parent applicable to Parent employees in effect at
the Effective Time.
6.13. EXPENSES.
Except as otherwise provided in SECTION 8.5, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this
Agreement and the Merger and the other transactions contemplated by hereby and
thereby shall be paid by the party incurring such expense, except that expenses
incurred in connection with the filing fee for the S-4 Registration Statement
and printing and mailing the Prospectus/Proxy Statement shall be shared equally
by Parent and the Company.
6.14. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time for a period of seven years,
Parent agrees that it will indemnify and hold harmless each present and former
director and officer of the Company (when acting in such capacity or when
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acting as a fiduciary at the request of the Company under or with respect to a
Company Compensation and Benefit Plan) (each, an Indemnified Party and,
collectively, the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees and expenses), judgments, fines, losses,
amounts paid in settlement claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
investigation, actual or threatened, whether civil, criminal, administrative or
investigative, based on or arising in whole or in part out of matters existing
or occurring at or prior to the Effective Time, including any such matters
involving the transactions contemplated by this Agreement, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that the
Company would have been permitted under Delaware law and its charter or by-laws
in effect on the date hereof to indemnify such Person (and Parent shall also
advance expenses as incurred to the fullest extent permitted under applicable
law provided the Person to whom expenses are advanced provides (i) a written
affirmation of his or her good faith belief that the standard of conduct
necessary for indemnification has been met, and (ii) an undertaking to repay
such advances if it is ultimately determined that such Person is not entitled to
indemnification).
(b) Parent shall cause to be maintained, for a period of not less
than seven years from the Effective Time, the Company's current directors' and
officers' liability insurance policy to the extent that it provides coverage for
events occurring prior to the Effective Time (the "D&O Insurance") for all
present and former directors and officers of the Company or any subsidiary
thereof, so long as the annual premium therefor would not be in excess of 150%
of the last annual premium paid for the D&O Insurance prior to the date of this
Agreement (150% of such premium, the "Maximum Premium"); provided that Parent
may, in lieu of maintaining such existing D&O Insurance as provided above, cause
no less favorable coverage to be provided under any policy maintained for the
benefit of the directors and officers of Parent or a separate policy provided by
the same insurer. If the existing D&O Insurance expires, is terminated or
canceled by the insurer or if the annual premium therefor would exceed the
Maximum Premium during such period, Parent shall obtain, if reasonably possible,
in lieu of such D&O Insurance, such comparable directors' and officers'
liability insurance as can be obtained for the remainder of such period for an
annualized premium not in excess of the Maximum Premium and on terms and
conditions no less advantageous than the existing D&O Insurance. In addition,
from and after the Effective Time for a period of seven years from the Effective
Time, Parent shall maintain in effect any Company-paid fiduciary liability
insurance policies for employees who serve or have served as fiduciaries under
or with respect to any Company Compensation and Benefit Plan at the request of
the Company and with coverages and in amounts no less favorable than those
policies of the Company
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52
or any of its Subsidiaries in effect on the date hereof, so long as the annual
premium therefor would not be in excess of 150% of the last annual premium paid
for such insurance by the Company prior to the date of this Agreement.
(c) The provisions of this Section are in addition to the rights
that an Indemnified Party may have under the certificate of incorporation,
bylaws or agreements of or with the Company or any of its Subsidiaries or under
applicable law. Parent agrees to pay all costs and expenses (including fees and
expenses of counsel) that may be incurred by any Indemnified Party in
successfully enforcing the indemnity or other obligations under this Section.
(d) In the event that Parent or any of its successors or assigns (i)
consolidates with or merges into any other Person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to
any Person, then, and in each such case, proper provision will be made so that
the successors and assigns of Parent assume the obligations set forth in this
Section.
6.15. OTHER ACTIONS BY THE COMPANY AND PARENT.
(a) The Company shall take all necessary action with respect to all
of the outstanding Company Rights so that, immediately prior to the Effective
Time, (i) neither the Company nor Parent will have any obligations under the
Company Rights or the Company Rights Agreement and (ii) the holders of the
Company Rights will have no rights under the Company Rights or the Company
Rights Agreement. Without Parent's prior written consent, the Company shall not
redeem any Company Rights or modify or terminate the Company Rights Agreement.
(b) If any Takeover Statute is or may become applicable to the
Merger or the other transactions contemplated by this Agreement, the Company and
its board of directors shall grant such approvals and take such actions as are
necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement, or by the Merger and
otherwise act to eliminate or minimize the effects of such statute or regulation
on such transactions.
(c) The Company and Parent will take all actions necessary to
promptly make the filings required of it or its affiliates under the HSR Act
with respect to the transactions contemplated by this Agreement, will comply
with all requests for additional information received from the appropriate
governmental authorities and will request early termination of the HSR Act
waiting period.
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6.16 BOARD OF DIRECTORS.
Promptly following the Effective Time, Parent's Board of Directors
shall be expanded by three and three persons currently serving on the Company
Board of Directors who are acceptable to the Parent Board of Directors in its
sole discretion shall be elected thereto as directors, to serve until their
successors are duly elected and qualified or until their earlier death,
resignation or removal in accordance with Parent's certificate of incorporation
and bylaws.
ARTICLE VII
CONDITIONS
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver at or prior to the Effective Time of each
of the following conditions:
(a) STOCKHOLDER APPROVALS. The Merger shall have been duly approved
by holders of Shares constituting the Company Requisite Vote, and the issuance
of Parent Common Stock pursuant to the Merger shall have been duly approved by
the holders of Parent Common Stock constituting the Parent Requisite Vote.
(b) NASDAQ LISTING. The shares of Parent Common Stock issuable to
the Company stockholders pursuant to this Agreement shall have been authorized
for listing on Nasdaq.
(c) REGULATORY CONSENTS. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated. Other than the filing provided for in SECTION 1.3, all other
notices, reports and other filings required to be made prior to the Effective
Time by the Company or Parent or any of their respective Subsidiaries with, and
all consents, registrations, approvals, permits and authorizations required to
be obtained prior to the Effective Time by the Company or Parent or any of their
respective Subsidiaries from, any governmental entity (collectively,
"Governmental Consents"), in connection with the execution and delivery of this
Agreement, and the consummation of the Merger and the other transactions
contemplated by this Agreement shall have been made or obtained, except where
the failure to make any such filings or obtain any such Governmental Consents
would not have a material adverse effect on either Parent, the Company and their
respective Subsidiaries in all jurisdictions requiring such filings or
Governmental Consents in the event such filings are not made or such Consents
are not obtained.
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(d) LITIGATION. No court or governmental entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, statute, ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger
(collectively, an "Order") and no governmental entity shall have instituted any
proceeding which continues to be pending seeking any such Order.
(e) S-4. The S-4 Registration Statement shall have become effective
under the Securities Act. No stop order suspending the effectiveness of the S-4
Registration Statement shall have been issued, and no proceeding for that
purpose shall have been initiated or be threatened, by the SEC.
7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY.
The obligations of Parent and Merger Subsidiary to effect the Merger
are also subject to the satisfaction or waiver by Parent at or prior to the
Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of the Company set forth in this Agreement shall not have been untrue
or incorrect as of the date of this Agreement; and (ii) the representations and
warranties of the Company set forth in this Agreement shall be true and correct
as of the Closing Date as though made on and as of the Closing Date (except to
the extent any such representation or warranty expressly speaks as of an earlier
date) except, in each case, where the failure of such representations and
warranties to be so true and correct (without giving effect to any
qualifications as to "Company Material Adverse Effect," "material" or similar
qualifications) would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect; and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer or Chief Financial Officer of the Company to the effect stated in the
foregoing clauses (i) and (ii).
(b) ABSENCE OF MATERIAL CHANGE. Since the date of this Agreement,
there shall not have occurred any event, change or effect having, or that would
be reasonably likely to have, a Company Material Adverse Effect.
(c) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Parent shall
have received a certificate signed on behalf of the Company by an executive
officer of the Company to such effect.
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(d) TAX OPINION. Parent shall have received the opinion of Xxxxx &
Xxxxxxx L.L.P., counsel to Parent, dated the Closing Date, to the effect that
the Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code, and each of Parent, Merger Subsidiary and the Company will
be a party to that reorganization within the meaning of Section 368(b) of the
Code. In rendering such opinion, Xxxxx & Xxxxxxx L.L.P. shall require delivery
of and rely upon representation letters delivered by Parent, Merger Subsidiary
and the Company in customary form.
(e) POOLING LETTERS; ACCOUNTANT LETTERS. Parent shall have received
(i) at least 45 days prior to the Effective Time, the Company Affiliates Letters
from all persons identified on EXHIBIT A-1 and any other person who Parent
reasonably believes to be an Affiliate of the Company and (ii) Parent shall have
received, in form and substance reasonably satisfactory to Parent, from each of
Ernst & Young LLP (or its successor) and KPMG LLP (or its successor) a favorable
letter, dated the Closing Date, regarding the appropriateness of
"pooling-of-interests" accounting treatment for the Merger.
7.3. CONDITIONS TO OBLIGATION OF THE COMPANY.
The obligation of the Company to effect the Merger is also subject
to the satisfaction or waiver by the Company at or prior to the Effective Time
of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of Parent and Merger Subsidiary set forth in this Agreement shall not
have been untrue or incorrect as of the date of this Agreement; and (ii) the
representations and warranties of Parent and Merger Subsidiary set forth in this
Agreement shall be true and correct as of the Closing Date as though made on and
as of the Closing Date (except to the extent any such representation or warranty
expressly speaks as of an earlier date) except, in each case, where the failure
of such representations and warranties to be so true and correct (without giving
effect to any qualifications as to "Parent Material Adverse Effect," "material"
or similar qualifications) would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect; and the Company
shall have received a certificate signed on behalf of Parent by an executive
officer of Parent and on behalf of Merger Subsidiary by an officer of Merger
Subsidiary to the effect stated in the foregoing clauses (i) and (ii).
(b) ABSENCE OF MATERIAL CHANGE. Since the date of this Agreement,
there shall not have occurred any event, change or effect having, or that would
be reasonably likely to have, a Parent Material Adverse Effect.
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(c) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY. Each
of Parent and Merger Subsidiary shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent and on behalf of Merger
Subsidiary by a manager of Merger Subsidiary to such effect.
(d) TAX OPINION. The Company shall have received the opinion of
Xxxxx, Day, Xxxxxx & Xxxxx, counsel to the Company, dated the Closing Date, to
the effect that the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that each
of Parent, Merger Subsidiary and the Company will be a party to that
reorganization within the meaning of Section 368(b) of the Code. In rendering
such opinion, Xxxxx Day, Xxxxxx & Xxxxx shall require delivery of and rely upon
the representation letters delivered by Parent, Merger Subsidiary and the
Company in customary form.
ARTICLE VIII
TERMINATION
8.1. TERMINATION BY MUTUAL CONSENT.
This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, whether before or after the approval by
stockholders of the Company and Parent referred to in SECTION 7.1(a), by mutual
written consent of the Company and Parent by action of their respective Boards
of Directors.
8.2. TERMINATION BY EITHER PARENT OR THE COMPANY.
This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time by action of the Board of Directors of
either Parent or the Company if (a) the Merger shall not have been consummated
by November 30, 2000, whether such date is before or after the date of approval
by the stockholders of the Company or Parent (the "Termination Date"); (b) the
approval of the Company's or Parent's stockholders required by SECTION 7.1(a)
shall not have been obtained at a meeting duly convened therefor or at any
adjournment or postponement thereof; or (c) any Order permanently restraining,
enjoining or otherwise prohibiting consummation of the Merger shall become final
and non-appealable; provided, that the right to terminate this Agreement
pursuant to clause (a) or (b) above shall not be available to any party that has
breached in any material respect its obligations under this Agreement in any
manner that shall have caused the
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occurrence of the failure of the Merger to be consummated or the stockholder
approval to be obtained.
8.3. TERMINATION BY THE COMPANY.
This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Company Stockholder Meeting, by action of the Board of
Directors of the Company:
(a) if (i) the Company is not in material breach of any of the terms
of this Agreement, (ii) the Merger shall not have been approved by the Company
Requisite Vote, (iii) the Board of Directors of the Company authorizes the
Company, subject to complying with the terms of this Agreement, to enter into a
binding written agreement concerning a transaction that constitutes a Superior
Proposal and the Company notifies Parent in writing that it intends to enter
into such an agreement, attaching the most current version of such agreement to
such notice, (iv) Parent does not make, within five business days of receipt of
the Company's written notification of its intention to enter into a binding
agreement for a Superior Proposal, an offer that the Board of Directors of the
Company determines, in good faith after consultation with its outside legal
counsel and its financial advisors, is at least as favorable to the stockholders
of the Company as the Superior Proposal taking into account the long-term value
to stockholders of the revised Merger Consideration and the strategic nature of
the proposed Merger, if applicable, and (v) the Company prior to such
termination pays to Parent in immediately available funds the fees required to
be paid pursuant to SECTION 8.5. The Company agrees (A) that it will not enter
into a binding agreement referred to in clause (iii) above until at least the
sixth business day after it has provided the notice to Parent required thereby
and (B) to notify Parent promptly if its intention to enter into a written
agreement referred to in its notification shall change at any time after giving
such notification; or
(b) if there is a breach by Parent or Merger Subsidiary of any
representation, warranty, covenant or agreement contained in this Agreement that
cannot be cured and would cause a condition set forth in SECTION 7.3(a) or
7.3(b) to be incapable of being satisfied.
8.4. TERMINATION BY PARENT.
This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, whether before or after the approval by
stockholders of Parent referred to in SECTION 7.1(a), by action of the Board of
Directors of Parent:
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(a) if the Company or its Board of Directors shall have (i)
withdrawn, modified or amended in any respect adverse to Parent its
recommendation of the adoption of this Agreement or failed to reconfirm its
recommendation of this Agreement or the Merger within three business days after
a written request by Parent to do so, (ii) failed as promptly as practicable
after the Form S-4 is declared effective to mail the Proxy Statement/Prospectus
to its stockholders, unless such failure was caused by the actions or inactions
of Parent or its representatives, or failed to include in such Proxy
Statement/Prospectus the Company Board Recommendation, (iii) approved,
recommended or entered into an agreement with respect to, or consummated, or
adopted a resolution to approve, recommend, enter into an agreement with respect
to, or consummate, any Acquisition Proposal from a person other than Parent or
any of its affiliates, (iv) in response to the commencement of any tender offer
or exchange offer for outstanding Company Common Stock, not recommended
rejection of such tender offer or exchange offer within ten business days after
the commencement thereof (as such term is defined in Rule 14d-2 under the
Exchange Act); or
(b) if there is a breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement that cannot be cured
and would cause a condition set forth in Section 7.2(a) or 7.2(b) to be
incapable of being satisfied.
8.5. EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this ARTICLE VIII, this Agreement (other
than as set forth in this SECTION 8.5 AND SECTION 9.1) shall become void and of
no effect with no liability on the part of any party hereto (or of any of its
directors, officers, employees, agents, legal and financial advisors or other
representatives); provided, however, except as otherwise provided herein, no
such termination shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement.
(b) In the event that this Agreement is terminated (i) by the
Company pursuant to SECTION 8.3(a) or (ii) by Parent pursuant to SECTION 8.4(a),
then the Company shall (x) promptly, but in no event later than the earlier of
the date of such termination or date of entrance into an agreement concerning an
Acquisition Proposal or such earlier time as required by this Agreement, pay to
Parent a termination fee of $6.5 million payable by wire transfer of same day
funds and (y) in no event later than two business days after Parent shall have
requested payment of its charges and expenses incurred in connection with the
transactions contemplated hereby, pay to Parent the
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amount of such charges and expenses up to a maximum of $1.5 million payable by
wire transfer of same day funds.
(c) In the event that this Agreement is terminated pursuant to
clause (b) of SECTION 8.2 and prior to, or at the time of, the Company
Stockholders Meeting referred to therein any Person shall have made an
Acquisition Proposal to the Company or any of its Subsidiaries or any of its
stockholders or shall have publicly announced an intention (whether or not
conditional) to make an Acquisition Proposal with respect to the Company or any
of its Subsidiaries and, if within 12 months of such termination, the Company
enters into an agreement concerning a transaction that constitutes an
Acquisition Proposal, the Company shall (x) at the time of entering into such
agreement, shall pay to Parent the termination fee of $6.5 million payable by
wire transfer of same day funds and (y) in no event later than two business days
after Parent shall have requested payment of its charges and expenses incurred
in connection with the transactions contemplated hereby, pay to Parent the
amount of such charges and expenses up to a maximum of $1.5 million payable by
wire transfer of same day funds.
(d) The Company and Parent each acknowledge that the agreements
contained in SECTIONS 8.5(b) and (c) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the Company,
Parent and Merger Subsidiary would not enter into this Agreement; accordingly,
if the Company fails to promptly pay the amounts due pursuant to SECTION 8.5(b)
or SECTION 8.5(c), and, in order to obtain such payment, Parent commences a suit
which results in a judgment against the Company for the fees set forth in this
SECTION 8.5, the Company shall pay to Parent its costs and expenses (including
attorneys' fees) in connection with such suit, together with interest from the
date of termination of this Agreement on the amounts owed at the prime rate of
First Union National Bank of Maryland in effect from time to time during such
period plus two percent.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. SURVIVAL.
This Article IX, Article III and the agreements of the Company,
Parent and Merger Subsidiary contained in SECTIONS 6.8 (Taxation and
Accounting), SECTIONS 6.12 (Benefits), 6.14 (Indemnification; Directors' and
Officers' Insurance) and 6.16 (Board of Directors) shall survive the
consummation of the Merger. This Article IX and the agreements of the Company,
Parent and Merger Subsidiary contained in SECTIONS 6.13 (Expenses), and SECTION
8.5 (Effect of Termination and Abandonment) shall
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survive the termination of this Agreement. All other representations,
warranties, covenants and agreements in this Agreement shall not survive the
consummation of the Merger or the termination of this Agreement.
9.2. MODIFICATION OR AMENDMENT.
Subject to the provisions of the applicable law, at any time prior
to the Effective Time, the parties hereto may modify or amend this Agreement, by
written agreement executed and delivered by duly authorized officers of the
respective parties.
9.3. WAIVER OF CONDITIONS.
The conditions to each of the parties' obligations to consummate the
Merger are for the sole benefit of such party and may be waived by such party in
whole or in part to the extent permitted by applicable law.
9.4. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each
such counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) This Agreement shall be deemed to be made in and in all respects
shall be interpreted, construed and governed by and in accordance with the law
of the state of Delaware without regard to the conflict of law principles
thereof.
(b) Each party acknowledges and agrees that any controversy which
may arise under this Agreement is likely to involve complicated and difficult
issues, and therefore each such party hereby irrevocably and unconditionally
waives any right such party may have to a trial by jury in respect of any
litigation directly or indirectly arising out of or relating to this Agreement,
or the transactions contemplated by this Agreement. Each party certifies and
acknowledges that (i) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (ii) each party
understands and has considered the implications of this waiver, (iii) each party
makes this waiver voluntarily, and (iv) each party has been induced to enter
into this Agreement by, among other things, the mutual waivers and
certifications in this Section 9.5.
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9.6. NOTICES.
Any notice, request, instruction or other document to be given
hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, by
overnight courier delivery, or by facsimile:
if to Parent or Merger Subsidiary:
Guilford Pharmaceuticals Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax (000) 000-0000
Copy (which shall not constitute notice) to:
Xxxxxxx X. Silver
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
if to the Company:
Gliatech Inc.
00000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
Copy (which shall not constitute notice) to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
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9.7. ENTIRE AGREEMENT; NO OTHER REPRESENTATIONS.
This Agreement (including any exhibits hereto), the Company
Disclosure Schedule, the Parent Disclosure Schedule, the Stockholders
Agreements, the Company Affiliate Letters and the Confidentiality Agreement
dated February 2, 2000, between Parent and the Company (the "Confidentiality
Agreement") constitute the entire agreement among the parties, and supersede all
other prior agreements, understandings, representations and warranties both
written and oral, among the parties, with respect to the subject matter hereof.
The parties hereto agree that the Confidentiality Agreement shall be hereby
amended to provide that any provision therein which in any manner would be
inconsistent with this Agreement or the transactions contemplated hereby or
thereby shall terminate as of the date hereof; provided, however, that such
provisions of the Confidentiality Agreement shall be reinstated in the event of
any termination of this Agreement.
9.8. NO THIRD PARTY BENEFICIARIES.
Except as provided in SECTIONS 6.14 (Indemnification; Directors' and
Officers' Insurance), 6.12(b)(i) and (ii) (Employee Benefits) and 6.16 (Board of
Directors), which are intended to confer certain rights upon third parties
referred to therein and to be enforceable by such third parties, this Agreement
is not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
9.9. SEVERABILITY.
The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability or the other provisions hereof. If any provision of this
Agreement, or the application thereof to any Person or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision
and (b) the remainder of this Agreement and the application of such provision to
other Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
9.10. INTERPRETATION.
The table of contents and headings herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof. Where a
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reference in this Agreement is made to a Section or Exhibit, such reference
shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
9.11. ASSIGNMENT.
This Agreement shall not be assignable by operation of law or
otherwise; provided, however, that Parent may designate, by written notice to
the Company, another wholly-owned direct or indirect Subsidiary to be a party to
the Merger in lieu of Merger Subsidiary, in which event all references herein to
Merger Subsidiary shall be deemed references to such other Subsidiary, except
that all representations and warranties made herein with respect to Merger
Subsidiary as of the date of this Agreement shall be deemed representations and
warranties made with respect to such other Subsidiary as of the date of such
designation.
9.12. DEFINITIONS
(a) Location of Certain Definitions.
Section
Acquisition Proposal........................................... 6.4
Affiliate...................................................... 3.2(h)
Agreement...................................................... Preamble
Applicable Foreign Competition Laws............................ 9.13(b)
By-Laws........................................................ 2.2
Certificate.................................................... 3.1(a)
Certificate of Incorporation................................... 2.1
Certificate of Merger.......................................... 1.3
Charter........................................................ 2.1
Closing........................................................ 1.2
Closing Date................................................... 1.2
Closing Stock Price............................................ 8.3(d)
Code........................................................... Recitals
Company........................................................ Preamble
Company Affiliates Letter...................................... 6.10(a)
Company Audit Date............................................. 4.5
Company Common Stock........................................... Recitals
Company Compensation and Benefit Plans......................... 4.8(a)
Company Confidential Information............................... 4.14(d)
Company Disclosure Schedule.................................... Preamble to
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Section
Article IV
Company Intellectual Property Rights........................... 4.14(b)(i)
Company Material Adverse Effect................................ 9.12(b)
Company Option................................................. 4.2
Company Reports................................................ 4.5
Company Requisite Vote......................................... 4.3(a)
Company Rights................................................. 4.21
Company Rights Agreement....................................... 4.21
Company Stock Plans............................................ 4.2
Company Third-Party Intellectual Property Rights............... 4.14(b)
Confidentiality Agreement...................................... 9.7
Contracts...................................................... 4.4(b)
Costs.......................................................... 6.14(a)
D&O Insurance.................................................. 6.14(b)
DGCL........................................................... 1.1
Effective Time................................................. 1.3
Environmental Law.............................................. 9.12(b)
ERISA.......................................................... 4.8(b)
ERISA Affiliate................................................ 4.8(c)
Exchange Act................................................... 4.4(a)
Exchange Agent................................................. 3.2(a)
Exchange Fund.................................................. 3.2(a)
Exchange Ratio................................................. 3.1(a)
GAAP........................................................... 4.5
Governmental Consents.......................................... 7.1(c)
Hazardous Substance............................................ 9.13(b)
HSR Act........................................................ 4.4(a)
Indemnified Parties............................................ 6.14(a)
IRS............................................................ 4.8(b)
Laws........................................................... 4.9
Maximum Premium................................................ 6.14(a)
Merger......................................................... Recitals
Merger Consideration........................................... 3.1(a)
Merger Subsidiary.............................................. Preamble
Merger Subsidiary Stock........................................ 5.1(b)
NASDAQ......................................................... 3.2(e)
Order.......................................................... 7.1(d)
Parent......................................................... Preamble
Parent Common Stock............................................ 3.1(a)
Parent Disclosure Schedule..................................... Preamble to
Article V
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Section
Parent Intellectual Property Rights............................ 5.15(b)(ii)
Parent Material Adverse Effect................................. 9.13(b)
Parent Option.................................................. 5.3
Parent Preferred Shares........................................ 5.3
Parent Reports................................................. 5.6
Parent Requisite Vote.......................................... 5.4(a)
Parent Rights.................................................. 5.22
Parent Rights Agreement........................................ 3.1(a)
Parent Shares.................................................. 5.3
Parent Stockholders Meeting.................................... 6.6
Parent Stock Plans............................................. 5.3
Pension Plan................................................... 4.8(b)
Person......................................................... 3.2(b)
Preferred Shares............................................... 4.2
Private Consents............................................... 4.4(b)
Prospectus/ Proxy Statement.................................... 6.5
Representatives................................................ 6.9
Responsible Executive Officers of Parent....................... 9.12(b)
Responsible Executive Officers of the Company.................. 9.12(b)
S-4 Registration Statement..................................... 6.5
SEC............................................................ 4.5
Secretary...................................................... 1.3
Securities Act................................................. 4.4(a)
Share, Shares.................................................. 3.1(a)
Stockholders Meeting........................................... 6.6
Subsidiary..................................................... 9.12(b)
Superior Proposal.............................................. 6.4
Surviving Company.............................................. 1.1
Takeover Statute............................................... 4.10
Tax, Taxes, Taxable............................................ 9.12(b)
Taxing Authority............................................... 9.12(b)
Tax Return..................................................... 9.12(b)
Termination Date............................................... 8.2
(B) CERTAIN OTHER DEFINITIONS.
"Applicable Foreign Competition Laws" shall mean Laws of any
foreign governmental body that are designed or intended to prohibit, restrict or
regulate actions having the purpose of effect of monopolization, lessening of
competition or restraint of trade and are applicable to the Merger.
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66
"Company Material Adverse Effect" means a material adverse
effect on the business, conditions (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole, other than
effects caused by changes in general economic conditions, provided that no
decline in the market price of the Shares on NASDAQ, in and of itself, shall
constitute a Company Material Adverse Effect.
"Environmental Law" means any federal, state, local or
foreign law, statute, ordinance, regulation, judgment, order, decree,
arbitration award, agency requirement, license, permit, authorization or
opinion, relating to: (i) the protection, investigation or restoration of the
environment, health and safety, or natural resources, (ii) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance or
(iii) noise, odor, wetlands, pollution, contamination or any injury or threat of
injury to persons or property, including but not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 USC secs. 9601 et.
sec.
"Hazardous Substance" means any substance or waste that is:
(i) listed, classified or regulated pursuant to any Environmental Law; (ii) any
petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or
(iii) any other substance or waste which may be the subject of regulatory action
by any Government Authority pursuant to any Environmental Law.
"Material Contract" has the meaning set forth in Item
601(b)(10) of Regulation S-K of the SEC.
"Parent Material Adverse Effect" means a material adverse
effect on the business, conditions (financial or otherwise) or results of
operations of Parent and its Subsidiaries taken as a whole, other than effects
caused by changes in general economic conditions, provided that no decline in
the market price of the Parent Common Stock on NASDAQ, in and of itself, shall
constitute a Parent Material Adverse Effect.
"Responsible Executive Officers of the Company" shall mean
Xxxxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx, Xxxx X. Xxxxxxx, Xxxxx
X. Xxxxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxxxxx X. Xxxxxxx, Xxxxx Xxxx and Xxxxx X.
Xxxxxxx and any other persons designated as such in the preamble to the Company
Disclosure Schedule.
"Responsible Executive Officers of Parent" shall mean Xxxxx
X. Xxxxx, Xxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxxxx X. Xxxx,
Xxxxxxx X. Xxxxxx, Xxxx X Xxxx, Xxxxx X. Xxxxx and Xxxxxx Xxxxxxx and
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67
any other persons designated as such in the preamble to the Parent Disclosure
Schedule.
"Subsidiary" means, with respect to the Company, Parent or
Merger Subsidiary, as the case may be, any entity, whether incorporated or
unincorporated, of which at least a majority of the securities or ownership
interests having by their terms ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions is directly or
indirectly owned or controlled by such party or by one or more of its respective
Subsidiaries or by such party and any one or more of its respective
Subsidiaries.
"Tax" (including, with correlative meaning, the terms "Taxes"
and "Taxable") shall mean, with respect to any Person, (i) all taxes, domestic
or foreign, including without limitation any income (net, gross or other,
including recapture of any tax items such as investment tax credits),
alternative or add-on minimum tax, gross income, gross receipts, gains, sales,
use, leasing, lease, user, ad valorem, transfer, recording, franchise, profits,
property (real or personal, tangible or intangible), fuel, license, withholding
on amounts paid to or by such Person, payroll, employment, unemployment, social
security, excise, severance, stamp, occupation, premium, environmental or
windfall profit tax, custom, duty or other tax, or other like assessment or
charge of any kind whatsoever, together with any interest, levies, assessments,
charges, penalties, additions to tax or additional amounts imposed by any Taxing
Authority, (ii) any joint or several liability of such Person with any other
Person for the payment of any amounts of the type described in (a) of this
definition and (iii) any liability of such Person for the payment of any amounts
of the type described in (i) as a result of any express or implied obligation to
indemnify any other Person.
"Tax Return(s)" shall mean all returns, consolidated or
otherwise (including without limitation informational returns), required to be
filed with any Taxing Authority.
"Taxing Authority" shall mean any authority responsible for
the imposition of any Tax.
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68
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
GUILFORD PHARMACEUTICALS INC.
By: /s/ Xxxxx X. Xxxxx, M.D.
-------------------------
Name: Xxxxx X. Xxxxx, M.D.
Title: President and Chief Executive Officer
GLIATECH INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxxxxxx, Ph.D.
Title: President and Chief Executive Officer
ST. XXXX DEVELOPMENT CORP.
By: /s/ Xxxxxx X. Xxxx
-------------------------
Name: Xxxxxx X. Xxxx
Title: President
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69
EXHIBITS
--------
Exhibit A-1 Company Affiliates
Exhibit A-2 Company Affiliates Letter
Exhibit B-1 Letter Agreement
Exhibit B-2 Change of Control Agreement
Exhibit B-3 Executive Letter Agreement
Exhibit B-4 List of Executives
Exhibit B-5 Executive Change of Control Agreement
