EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
HMSR INC.
PT ACQUISITION CORP.
and
POINT THERAPEUTICS, INC.
Dated as of November 15, 2001
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 15, 2001 (this
"Agreement"), among HMSR Inc., a Delaware corporation ("Parent"), PT Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), and Point Therapeutics, Inc., a Massachusetts corporation (the
"Company").
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have each determined that it is advisable and in the best interests
of their respective stockholders for Merger Sub to merge with the Company
pursuant and subject to the terms and conditions set forth herein (the
"Merger");
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations promulgated thereunder;
and
WHEREAS, pursuant to the Merger, each outstanding share (a "Share") of
the Company's common stock, no par value (the "Company Common Stock"), shall be
converted into the right to receive the Merger Consideration (as defined in
Section 1.7(b)), upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I. THE MERGER
Section 1.1. The Merger.
(a) Effective Time. At the Effective Time (as defined in Section 1.2),
and subject to and upon the terms and conditions of this Agreement, the
applicable provisions of the Delaware General Corporation Law (the "DGCL") and
the applicable provisions of the Massachusetts Business Corporation Law (the
"MBCL"), Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation under the laws of the Commonwealth of Massachusetts.
The Company as the surviving corporation after the Merger is hereinafter
sometimes referred to as the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1 and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the consummation of the Merger will take place as promptly as
practicable (and in any event within two (2) business days) after satisfaction
or waiver of the conditions set forth in Article VI, at the offices of Ropes &
Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx, unless another date, time
or place is agreed to in writing by the parties hereto.
Section 1.2. Effective Time. As promptly as practicable after the satisfaction
or waiver of the conditions set forth in Article VI, the parties hereto shall
cause the Merger to be consummated by filing a certificate of merger as
contemplated by the DGCL and articles of merger as contemplated by the MBCL
(collectively, the "Certificates of Merger"), together with any other documents
required by law to effectuate the Merger, with the Secretary of State of the
State of Delaware and the Secretary of State of the Commonwealth of
Massachusetts, respectively, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL and the MBCL, respectively
(the time of such filings, or such later time as may be specified in the
Certificates of Merger, being the "Effective Time"). Each filing of the
Certificates of Merger shall be made simultaneously with the other and as soon
as possible after the closing of the transactions contemplated by this
Agreement.
Section 1.3. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificates of Merger and
the applicable provisions of the DGCL and the MBCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 1.4. Articles of Organization, By-laws.
(a) Articles of Organization. At the Effective Time, the Articles of
Organization of the Company, in effect immediately prior to the Effective Time,
in the form attached hereto as Exhibit 1.4(a) (as amended pursuant to the
articles of merger to reflect the change in the corporation's name, as set forth
in Section 1.4(c)), shall be the Articles of Organization of the Surviving
Corporation until thereafter amended in accordance with the MBCL and such
Articles of Organization.
(b) By-laws. At the Effective Time, the by-laws of the Company, in effect
immediately prior to the Effective Time, in the form attached hereto as Exhibit
1.4(b), shall be the by-laws of the Surviving Corporation until thereafter
amended in accordance with the MBCL, the Articles of Organization of the
Surviving Corporation and such by-laws.
(c) Name of Surviving Corporation. At the Effective Time and thereafter
until changed as provided by law, the name of the Surviving Corporation shall be
"Point Therapeutics Massachusetts, Inc."
Section 1.5. Directors and Officers. At the Effective Time, the initial
directors of the Surviving Corporation shall be as set forth on Exhibit 1.5,
each to hold office in accordance with the Articles of Organization and by-laws
of the Surviving Corporation. At the Effective Time, the initial officers of the
Surviving Corporation shall be as set forth on Exhibit 1.5, each to hold office
until their respective successors are duly elected or appointed and qualified.
Section 1.6. Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, the Company or
the holders of any of (i) any shares of capital stock of the Company, (ii) any
shares of capital stock of Merger Sub or (iii) any shares of capital stock of
Parent, the following provisions shall apply:
(a) Conversion of Securities. Each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (excluding any Shares to
be canceled pursuant to Section 1.6(b) and any Dissenting Shares), including the
Conversion Shares (as defined below), shall be converted, subject to Section
1.6(f), into the right to receive the number of shares of validly issued, fully
paid and nonassessable shares ("Parent Shares") of the common stock, par value
$.01 per share, of Parent ("Parent Common Stock") equal to the Exchange Ratio.
The "Exchange Ratio" shall be the quotient obtained by dividing (A) the Company
Common Stock Per Share Price by (B) the Parent Common Stock Per Share Price. The
"Company Common Stock Per Share Price" shall be equal to (X) the Company
Valuation divided by (Y) the Number of Shares of Company Common Stock on a Fully
Diluted Basis. The "Company Valuation" shall be $77,000,000. The "Parent Common
Stock Per Share Price" shall be equal to (X) the Parent Valuation divided by (Y)
the Number of Shares of Parent Common Stock on a Fully Diluted Basis. The
initial "Parent Valuation" shall be $23,000,000. The initial Exchange Ratio
shall be 37.3773. The Exchange Ratio, the Company Common Stock Per Share Price
and the Parent Valuation are subject to adjustment pursuant to Section 1.14.
Each share of Company Preferred Stock issued and outstanding immediately prior
to the Effective Time shall, pursuant to the terms of the Preferred Stock
Conversion Agreement and the terms of Article IV of the Company's Articles of
Organization, be converted into shares of Company Common Stock immediately prior
to the Effective Time (the "Conversion Shares").
(b) Cancellation. Each Share held in the treasury of the Company and
each Share owned by Parent and Merger Sub immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, be canceled and retired
without payment of any consideration therefor and cease to exist.
(c) Stock Options.
(1) At the Effective Time, each outstanding option to purchase
Company Common Stock (a "Stock Option") granted under the Company's 1997
Stock Option Plan (the "Company Stock Option Plan"), whether vested or
unvested, shall be deemed assumed by Parent and (i) each Stock Option
assumed by Parent may be exercised only for shares of Parent Common
Stock on the same terms and conditions as were in effect prior to the
Effective Time, including, without limitation, any vesting periods, (ii)
the number of shares of Parent Common Stock subject to each such Stock
Option shall be the number of whole shares of Parent Common Stock
(omitting any fractional share) determined by multiplying the number of
shares of Company Common Stock subject to such Stock Option immediately
prior to the Effective Time (not taking into account whether or not such
option was in fact exercisable) by the Exchange Ratio and (iii) the per
share exercise price under each such Stock Option shall be adjusted by
dividing the per share exercise price under each such Stock Option by
the Exchange Ratio and rounding up to the nearest cent.
(2) As soon as practicable after the Effective Time, Parent shall
deliver to each holder of an outstanding Stock Option an appropriate
notice setting forth such holder's rights pursuant thereto, and such
Stock Option shall continue in effect on the same terms and conditions.
(3) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of Parent Shares for delivery pursuant
to the terms set forth in this Section 1.6(c).
(4) Subject to any applicable limitations under the Securities
Act of 1933, as amended, and the rules and regulations thereunder (the
"Securities Act"), Parent shall file a Registration Statement on Form
S-8 (or any successor form), as soon as reasonably practicable following
the Effective Time, with respect to the shares of Parent Common Stock
issuable upon exercise of the Stock Options, and Parent shall use all
reasonable efforts to maintain the effectiveness of such registration
statement(s) (and maintain the current status of the prospectus or
prospectuses relating thereto) for so long as such options shall remain
outstanding.
(d) Company Warrants.
(1) At the Effective Time, each outstanding warrant to purchase
Company Common Stock (a "Company Warrant") shall be deemed assumed by
Parent and (i) each Company Warrant assumed by Parent may be exercised
only for shares of Parent Common Stock on the same terms and conditions
as were in effect prior to the Effective Time, (ii) the number of shares
of Parent Common Stock subject to each such Company Warrant shall be the
number of whole shares of Parent Common Stock (omitting any fractional
share) determined by multiplying the number of shares of Company Common
Stock subject to such Company Warrant immediately prior to the Effective
Time (not taking into account whether or not such warrant was in fact
exercisable) by the Exchange Ratio and (iii) the per share exercise
price under each such Company Warrant shall be adjusted by dividing the
per share exercise price under each such Company Warrant by the Exchange
Ratio and rounding up to the nearest cent. Parent shall issue a new
warrant (in form and substance satisfactory to the holder of each
Company Warrant) for each Company Warrant assumed by Parent under this
Section 1.6(d).
(2) As soon as practicable after the Effective Time, Parent shall
deliver to each holder of an outstanding Company Warrant an appropriate
notice setting forth such holder's rights pursuant thereto, and such
Company Warrant shall continue in effect on the same terms and
conditions.
(3) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of Parent Shares for delivery pursuant
to the terms set forth in this Section 1.6(d).
(e) Capital Stock of Merger Sub. Each share of common stock, par value
$.01 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, $.01 par value, of the
Surviving Corporation.
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted
to reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Parent
Common Stock or Company Common Stock), reorganization, recapitalization or other
like change with respect to Parent Common Stock or Company Common Stock
occurring after the date hereof and prior to the Effective Time.
(g) Fractional Shares. No certificates or scrip representing less than
one Parent Share shall be issued upon the surrender for exchange of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"). In lieu of any such
fractional share, each holder of Shares who would otherwise have been entitled
to a fraction of a Parent Share upon surrender of Certificates for exchange
shall be paid upon such surrender cash equal to the product of (i) such fraction
and (ii) the average of the last sale prices per share of Company Common Stock
on the OTC Bulletin Board for the thirty (30) consecutive days on which the OTC
Bulletin Board is open for quotation immediately preceding the date upon which
the Effective Time occurs.
Section 1.7. Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective Time, Parent shall
supply, or shall cause to be supplied, to or for the account of American Stock
Transfer & Trust Company, or such other bank or trust company as shall be
designated by Parent (the "Exchange Agent"), in trust for the benefit of the
holders of Company Common Stock, for exchange in accordance with this Section
1.7, through the Exchange Agent, certificates evidencing Parent Shares issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock. Parent agrees to make available to the Exchange Agent, from time to time
as needed, cash sufficient to pay cash in lieu of fractional shares and any
dividends and distributions. Notwithstanding the foregoing, nothing in this
Section 1.7 shall obligate Parent to declare any dividends or distributions with
respect to its capital stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of Certificates (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify), and (ii) instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing Parent Shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) certificates evidencing that number
of whole Parent Shares which such holder has the right to receive in accordance
with the Exchange Ratio in respect of the Shares formerly evidenced by such
Certificate, (B) any dividends or other distributions to which such holder is
entitled pursuant to Section 1.7(c), and (C) cash in respect of fractional
shares as provided in Section 1.6(g) (such Parent Shares, dividends,
distributions and cash being, collectively, the "Merger Consideration") and the
Certificate so surrendered shall forthwith be canceled. Until so surrendered,
each outstanding Certificate that, prior to the Effective Time, represented
Shares of Company Common Stock will be deemed from and after the Effective Time,
to represent for all purposes, other than the payment of dividends and subject
to Section 1.6(f), only the right to receive upon such surrender a certificate
representing the number of Parent Shares into which such shares of Company
Common Stock shall have been so converted.
(c) Distributions With Respect to Unexchanged Parent Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Shares with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to Parent
Shares they are entitled to receive until the holder of such Certificate shall
surrender such Certificate. Subject to applicable law and the provisions of
Section 1.7(f) below, following surrender of any such Certificate, there shall
be paid to the record holder of the certificates representing whole Parent
Shares issued in exchange therefor, without interest, at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole Parent
Shares.
(d) Transfers of Ownership. If any certificate for Parent Shares is to
be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it will be a condition to the issuance thereof
that the Certificate so surrendered will be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange will have
paid to Parent or any agent designated by it any transfer or other taxes
required by reason of the issuance of a certificate for Parent Shares in any
name other than that of the registered holder of the certificate surrendered, or
have established to the satisfaction of Parent or any agent designated by it
that such tax has been paid or is not payable.
(e) No Liability. At any time following six months after the Effective
Time, Parent shall be entitled to require the Exchange Agent to deliver to
Parent any Merger Consideration which had been made available to the Exchange
Agent by or on behalf of Parent and which has not been disbursed to holders of
Certificates, and thereafter such holders shall be entitled to look to Parent
only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates. Notwithstanding the foregoing,
neither Parent, Merger Sub nor the Company shall be liable to any holder of
Company Common Stock for any Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. Any
shares of Parent Common Stock or other amounts remaining unclaimed by holders of
Shares two years after the Effective Time (or such earlier date immediately
prior to such time as such amounts would otherwise escheat to or become property
of any governmental authority) shall, to the extent permitted by applicable law,
become the property of Parent free and clear of any claims or interest of any
person previously entitled thereto.
(f) Withholding Rights. Parent or the Exchange Agent shall be entitled
to deduct and withhold from the Merger Consideration otherwise payable pursuant
to this Agreement such amounts as Parent or the Exchange Agent is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by Parent
or the Exchange Agent.
Section 1.8. Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers of Company Common Stock or Company Preferred Stock thereafter on
the records of the Company.
Section 1.9. No Further Ownership Rights in Company Common Stock or Company
Preferred Stock. The Merger Consideration delivered upon the surrender for
exchange of Shares in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Shares or
Company Preferred Stock, and there shall be no further registration of transfers
on the records of the Surviving Corporation of Shares or shares of Company
Preferred Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article I.
Section 1.10. Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof and delivery of bond
in such sum as it may reasonably direct
as indemnity against any claim that may be made against Parent or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed, such Parent Shares as may be required pursuant to Section 1.6.
Section 1.11. Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
Section 1.12. Taking of Necessary Action; Further Action. Each of Parent,
Merger Sub and the Company will take all such reasonable and lawful action as
may be necessary or appropriate in order to effectuate the Merger in accordance
with this Agreement as promptly as possible. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary reasonable action.
Section 1.13. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary, any
Shares that are outstanding immediately prior to the Effective Time and which
are held by holders of Company Common Stock who shall not have voted in favor of
the Merger or consented thereto in writing and who shall have demanded properly
in writing appraisal for such shares in accordance with Section 89 of the MBCL
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive the Merger Consideration. Such stockholders shall be
entitled to receive payment of the appraised value of such shares held by them
in accordance with the provisions of such Section 89, except that all Dissenting
Shares held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such shares shall
thereupon be deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive the Merger Consideration
without any interest thereon, upon surrender, in the manner provided in Section
1.7(b), of the Certificate or Certificates that formerly evidenced such shares.
(b) The Company shall give Parent prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to the MBCL and received by the Company. The Company
shall not, except with the prior written consent of Parent, make any payment
with respect to any demand for appraisal or offer to settle or settle any such
demand.
Section 1.14 Adjustments.
(a) On the date that is not less than thirty (30) days prior to the
anticipated Effective Time of the Merger, as mutually agreed by the parties,
Parent shall prepare and deliver to the Company an unaudited statement that
shall consist solely of a balance sheet of Parent as at the last day of the most
recent prior month (the "Statement Date") and an income statement of Parent
covering the period from October 1, 2001 through the Statement Date (the
"Closing Statement") on a basis prepared in accordance with GAAP applied
consistently with the Parent SEC Reports (as defined in Section 3.7(a)). Such
Closing Statement shall include a good faith estimation of the Net Available
Cash (as defined in Section 8.3(i)) on the anticipated closing date of the
Merger (the "Estimated Net Available Cash"), taking into account all expenses
relating to the Merger expected to be incurred by Parent ("Parent Merger
Expenses") and all other anticipated liabilities not set forth on the Closing
Statement. Within ten (10) days following the delivery of the Closing Statement
by Parent to the Company, the Company may object to the Estimated
Net Available Cash calculation by notifying Parent in writing; if the Company
does not so object, the "Final Net Available Cash" shall equal the Estimated Net
Available Cash. If the Company objects to the Estimated Net Available Cash
calculation, the parties shall attempt to resolve such dispute by negotiation
and mutually agree upon the Final Net Available Cash. Parent shall cooperate
with the Company and provide the Company and the Company's certified public
accountants with reasonable access to all information used by Parent to prepare
the Closing Statement. If the parties are unable to resolve such dispute within
ten (10) days of any objection by the Company, the parties shall appoint one of
the five largest independent certified public accounting firms, as shall be
mutually agreed upon, who shall, at Parent's and the Company's joint expense,
review the Closing Statement and Estimated Net Available Cash calculation and
determine the adjustment to the Estimated Net Available Cash, if any,
necessitated. The finding of such accounting firm shall be deemed to be the
Final Net Available Cash and shall be binding on the parties hereto. If the
Final Net Available Cash is less than $16,500,000, the Parent Valuation shall be
adjusted to be equal to (X) the then-current Parent Valuation minus (Y) the
Shortfall. The "Shortfall" means the positive number, if any, obtained by
subtracting the Final Net Available Cash from $16,500,000. The acceptance by the
Company and Parent of the Final Net Available Cash Calculation shall not
constitute or be deemed to constitute a waiver of the rights of such party
pursuant to Sections 6.1, 6.2 and 6.3, as applicable, or a waiver of any breach
of any representation, warranty or agreement herein.
(b) If, prior to the Effective Time, there is any change in the Number
of Shares of Company Common Stock Outstanding on a Fully Diluted Basis, the
Company Common Stock Per Share Price shall be adjusted pursuant to the formula
for the Company Common Stock Per Share Price set forth in Section 1.6(a). If,
prior to the Effective Time, there is any change in the Number of Shares of
Parent Common Stock Outstanding on a Fully Diluted Basis, the Parent Common
Stock Per Share Price shall be adjusted pursuant to the formula for the Parent
Common Stock Per Share Price set forth in Section 1.6(a).
(c) For purposes of this Section 1.14, Parent Merger Expenses shall
include without limitation all amounts payable (whether payable before, at or
after the Effective Time) to employees and consultants of Parent who are
employed or engaged by Parent prior to the Effective Time, including all amounts
payable pursuant to the employment and consulting agreements listed on Exhibit
1.14(c) and (ii) all premiums to be paid by Parent for the directors' and
officers' tail insurance coverage described in Sections 6.3(h).
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
Section 2.1. Organization and Qualification; No Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts and has the requisite corporate power and
authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("Approvals") necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted,
except where the failure to have such Approvals does not constitute a Company
Material Adverse Effect. The Company is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that do not
constitute a Company Material Adverse Effect. The Company has no subsidiaries.
Section 2.2. Articles of Organization and By-laws. The Company has heretofore
furnished to Parent a complete and correct copy of its Articles of Organization
and by-laws as most recently restated and amended to date. Such Articles of
Organization and by-laws are in full force and effect. The Company is not in
violation of any of the provisions of its Articles of Organization or by-laws.
Section 2.3. Capitalization. The authorized capital stock of the Company
consists of (1) 2,500,000 shares of Company Common Stock and (2) 387,500 shares
of Company Preferred Stock. As of the date of this Agreement, (i) 1,387,400
shares of Company Common Stock were issued and outstanding, all of which were
validly issued, and are fully paid and nonassessable, and no shares of Company
Common Stock were held in treasury, (ii) 387,500 shares of
Company Preferred Stock were issued and outstanding, all of which were validly
issued, and are fully paid and nonassessable, and no shares of Company Preferred
Stock were held in treasury, (iii) 425,000 shares of Company Common Stock were
reserved for future issuance under the Company Stock Option Plan, (iv) options
to purchase 238,696 shares of Company Common Stock have been granted under the
Company Stock Option Plan, (v) 387,500 shares of Company Common Stock were
reserved for issuance upon conversion of outstanding shares of Company Preferred
Stock, and (vi) 46,871 shares of Company Common Stock were reserved for issuance
upon the exercise of Company Warrants. Pursuant to the terms of Article IV of
the Articles of Organization of the Company, each share of Company Preferred
Stock shall automatically be converted into the number of shares of Company
Common Stock into which each such share of Company Preferred Stock is
convertible at the Applicable Conversion Rate (as defined in Article IV of the
Articles of Organization of the Company) then in effect upon the conversion of
at least two-thirds of the aggregate number of shares of Company Preferred Stock
issued pursuant to the Series A Stock Purchase Agreement and the Series B Stock
Purchase Agreement (each as defined in Article IV of the Articles of
Organization of the Company). Each outstanding share of Company Preferred Stock
was issued pursuant to the Series A Stock Purchase Agreement or the Series B
Stock Purchase Agreement. The Applicable Conversion Rate in effect as of the
date hereof is 1.00, which would result in the conversion of each share of
Company Preferred Stock into 1.00 shares of Company Common Stock if such shares
were converted on the date hereof pursuant to Article IV of the Company's
Articles of Organization. Pursuant to the terms of the Preferred Stock
Conversion Agreement, holders of shares of Company Preferred Stock constituting
at least two-thirds of the aggregate number of shares of Company Preferred Stock
issued pursuant to the Series A Stock Purchase Agreement and the Series B Stock
Purchase Agreement have agreed to convert such shares into shares of Company
Common Stock immediately prior to the Effective Time. Except as set forth in
this Section 2.3 or Section 2.11 of the written disclosure schedule delivered on
or prior to the date hereof by the Company to Parent that is arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article II (the "Company Disclosure Schedule"), there are no options,
warrants, calls, subscriptions or other rights, agreements, arrangements or
commitments of any character which either (i) obligate the Company to issue,
sell, transfer, repurchase, redeem or otherwise acquire or vote any shares of
capital stock of, or other equity interests in, the Company or (ii) restrict or
limit the voting, disposition or other transfer of any shares of capital stock
of the Company. None of the options, warrants, rights, agreements, arrangements
or commitments identified in Section 2.3 or Section 2.11 of the Company
Disclosure Schedule provide that upon exercise or conversion the holder thereof
shall receive cash. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding stock
appreciation rights or similar derivative securities or rights of the Company.
Except as set forth in Section 2.3 of the Company Disclosure Schedule, there are
no obligations, contingent or otherwise, of the Company to provide funds to or
make any investment (in the form of a loan, capital contribution, guaranty or
otherwise) in any other entity. No bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into securities having the
right to vote) on any matters which stockholders may vote are issued and
outstanding. Section 2.3 of the Company Disclosure Schedule includes a complete
and correct list setting forth as of the date hereof (i) the number of warrants
and options of the Company outstanding, (ii) the dates on which such warrants
and options were granted, (iii) the name of the holders of such warrants and
options and (iv) the exercise price of each such warrant and option. The Company
has delivered to Parent complete and correct copies of all stock option and
similar plans of the Company, all forms of Options issued thereunder and copies
of all warrants and warrant agreements of the Company.
Section 2.4. Authority Relative to this Agreement.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the adoption of this Agreement by the
holders of at least two-thirds of the outstanding shares of Company Common Stock
and the holders of at least two-thirds of the outstanding shares of Company
Preferred Stock, each voting as a separate class, entitled to vote in accordance
with the MBCL and the
Company's Articles of Organization and by-laws). This Agreement has been duly
and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, as applicable,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in law or in equity.
(b) The Board of Directors of the Company has duly and validly approved
and taken all corporate action required to be taken by the Board of Directors
for the consummation of the transactions contemplated by this Agreement,
including, but not limited to, all actions necessary to render the provisions of
Chapter 110F of the MBCL inapplicable to this Agreement and the Merger. The
Board of Directors of the Company has determined that it is advisable and in the
best interest of the Company's stockholders for the Company to enter into the
Merger with Merger Sub upon the terms and subject to the conditions of this
Agreement, and has recommended that the Company's stockholders approve and adopt
this Agreement and the Merger.
Section 2.5. Noncontravention; Required Filings and Consents.
(a) Each material contract (including all amendments thereto) to which
the Company is a party or by which the Company is bound is identified in Section
2.5(a) of the Company Disclosure Schedule. A "material contract" shall include,
but not be limited to: (i) contracts with any current or former officer or
director of the Company; (ii) contracts for the sale of any real property or
other material assets of the Company or for the purchase of real property or
other material assets other than in the ordinary course of business or for the
grant to any person of any preferential rights to purchase any of its material
assets; (iii) contracts containing covenants of the Company not to compete in
any line of business or with any person in any geographical area; (iv)
indentures, credit agreements, mortgages, promissory notes, and all contracts
relating to the borrowing of money; (v) contracts, agreements or arrangements
with any affiliate of the Company, and (vi) joint venture agreements to which
the Company is a party.
(b) Except as disclosed in Section 2.5(b) of the Company Disclosure
Schedule, (i) the Company has not breached, is not in default under, or has not
received written notice of any breach of or default under, any of the
agreements, contracts or other instruments referred to in Section 2.5(a), (ii)
to the best knowledge of the Company, no other party to any of the agreements,
contracts or other instrument referred to in Section 2.5(a) has breached or is
in default of any of its obligations thereunder, and (iii) each of the
agreements, contracts and other instruments referred to in Section 2.5(a) is in
full force and effect, except in any such case for breaches, defaults or
failures to be in full force and effect that do not constitute a Company
Material Adverse Effect.
(c) Except as set forth in Section 2.5(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
Articles of Organization or by-laws of the Company, (ii) conflict with or
violate any federal, foreign, state or provincial law, rule, regulation, order,
judgment or decree (collectively, "Laws") applicable to the Company or by which
its or any of its properties is bound or affected, or (iii) conflict with or
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or impair the Company's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a Lien on any of the properties or assets of the
Company pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company is a party or by which the Company or its respective properties is bound
or affected, except in the case of clauses (ii) and (iii) for any such
conflicts, violations, breaches, defaults or other occurrences that do not
constitute a Company Material Adverse Effect.
(d) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any domestic or foreign governmental or regulatory authority or third party
except (i) for applicable requirements, if any, of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), state
securities laws ("Blue Sky Laws"), and the filing and recordation of appropriate
merger or other documents as required by the DGCL and the MBCL, and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay consummation of
the Merger, and otherwise prevent the Company from performing its obligations
under this Agreement, and do not constitute a Material Adverse Effect.
Section 2.6. Compliance with Applicable Laws, Permits.
(a) Except as disclosed in Section 2.6(a) of the Company Disclosure
Schedule, the Company is not in conflict with, or in default or violation of,
and has not violated (i) any Law applicable to the Company or its business or by
which its properties are bound or affected nor (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by which the Company
or its properties are bound or affected, except, in each case, for any such
conflicts, defaults or violations which do not constitute a Company Material
Adverse Effect.
(b) Except as disclosed in Section 2.6(b) of the Company Disclosure
Schedule, the Company holds all permits, licenses, easements, variances,
exemptions, consents, certificates, orders and approvals from governmental
authorities which are material to the operation of the business of the Company
as it is now being conducted (collectively, the "Company Permits"). The Company
is in compliance with the terms of the Company Permits, except where the failure
to so comply does not constitute a Company Material Adverse Effect.
Section 2.7. Financial Statements.
Each of the financial statements (including, in each case, any related
notes thereto) identified in Section 2.7 of the Company Disclosure Schedule
(true and complete copies of which have been provided to Parent) (the "Company
Financial Statements") was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto), and each fairly presents in all material respects the
financial position of the Company as at the respective dates thereof and the
consolidated results of its operations and cash flows and stockholder equity for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
Section 2.8. Absence of Certain Changes or Events. Except as set forth in
Section 2.8 of the Company Disclosure Schedule, since September 30, 2001, the
Company has conducted its business in the ordinary course and there has not
occurred any action or event that would have required the consent of Parent
pursuant to Section 4.1(a) through Section 4.1(j) had such action or event
occurred after the date of this Agreement.
Section 2.9. No Undisclosed Liabilities. Except for those liabilities that are
fully reflected or reserved against on the Company Financial Statements (or in
the notes thereto) or as set forth in Section 2.9 of the Company Disclosure
Schedule, the Company does not have (i) any liabilities or obligations of any
material nature that would be required by GAAP to be set forth on a balance
sheet of the Company or in the notes thereto or (ii) outstanding any liability
or obligation of any nature whatsoever (whether absolute, accrued, contingent,
known or unknown, or otherwise and whether due or to become due), except in
either case for liabilities and obligations that have been incurred since the
date of the Company Financial Statements in the ordinary course of business
consistent with past practices and that would not reasonably be likely,
individually or in the aggregate, to have a Company Material Adverse Effect.
Section 2.10. Absence of Litigation. Except as set forth in Section 2.10 of the
Company Disclosure Schedule, there are no claims, actions, suits, proceedings or
investigations (collectively, "Claims") pending or, to the knowledge of the
Company, threatened (nor, to the knowledge of the Company, is there any basis
for any present or future material claim, action, suit, proceeding or
investigation) against the Company, or any properties or rights of the Company,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign.
Section 2.11. Employee Benefit Plans, Employment Agreements.
(a) Section 2.11(a) of the Company Disclosure Schedule identifies any
employee pension plans (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), any material employee
welfare plans (as defined in Section 3(1) of ERISA), and any material bonus,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee benefit plans,
programs or arrangements (collectively, the "Company Employee Plans") which
could result in any material liability of the Company or any member of its
controlled group within the meaning of Section 414(b) and 414(c) of the Code.
Except in each case as set forth in Section 2.11 of the Company Disclosure
Schedule or where the liability, individually or in the aggregate with respect
to the following, does not constitute a Company Material Adverse Effect, (i)
there has been no breach of fiduciary duty or "prohibited transaction," as such
term is defined in Section 406 of ERISA and Section 4975 of the Code, with
respect to any Company Employee Plans; (ii) all Company Employee Plans have been
operated in accordance with their terms and are in compliance in all material
respects with the requirements prescribed by any and all Laws (including ERISA
and the Code), currently in effect with respect thereto (including all
applicable requirements for notification to participants or the Department of
Labor, Pension Benefit Guaranty Corporation (the "PBGC"), Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and the Company has performed
all obligations required to be performed by it under, is not in any material
respect in default under or violation of, and has no knowledge of any default or
violation by any other party to, any of the Company Employee Plans; (iii) each
Company Employee Plan intended to qualify under Section 401(a) of the Code and
each trust intended to qualify under Section 501(a) of the Code is the subject
of a favorable determination letter (or where no determination letter is
required, a favorable opinion letter) from the IRS, and nothing has occurred
which may reasonably be expected to impair such determination; (iv) all
contributions required to be made to any Company Employee Plan pursuant to
Section 412 of the Code, or the terms of the Company Employee Plan or any
collective bargaining agreement, have been made on or before their due dates;
(v) with respect to each Company Employee Plan, no "reportable event" within the
meaning of Section 4043 of ERISA (excluding any such event for which the 30-day
notice requirement has been waived under the regulations to Section 4043 of
ERISA) nor any event described in Section 4062, 4063 or 4041 of ERISA has
occurred; (vi) no Company Employee Plan will cause or be reasonably expected to
cause any liability under Title IV of ERISA (other than liability for premium
payments to the PBGC, and contributions not in default to the respective plans,
arising in the ordinary course), and no Company Employee subject to Title IV of
ERISA has terminated within the past six years; and (vii) neither the Company
nor any member of its controlled group (within the meaning of Section 414(b) or
414(c) of the Code) has ever contributed or had any obligation to a
"multiemployer plan" or a "multiple employer welfare plan" within the meaning of
Sections 3(37)(A) or 3(40)(A) of ERISA.
(b) Section 2.11(b) of the Company Disclosure Schedule sets forth a true
and complete list of each current or former employee, officer or director of the
Company who holds (i) any option to purchase Company Common Stock as of the date
hereof, together with the number of shares of Company Common Stock subject to
such option, the option price of such option (to the extent determined as of the
date hereof), whether such option is intended to qualify as an incentive stock
option within the meaning of Section 422(b) of the Code (an "ISO"), and the
expiration date of such option; or (ii) any other right, directly or indirectly,
to acquire Company Common Stock, together with the number of shares of Company
Common Stock subject to such right. Section 2.11(c) of the Company Disclosure
Schedule also sets forth the total number of such ISOs, such nonqualified
options and such other rights.
(c) Section 2.11(c) of the Company Disclosure Schedule sets forth a true
and complete list of: (i) all employment agreements with officers of the
Company; (ii) all agreements with consultants who are individuals obligating the
Company to make cash payments in an amount exceeding $10,000 annually; (iii) all
employees of, or consultants to, the Company who have executed a non-competition
agreement with the Company; (iv) all severance agreements, programs and policies
of the Company with or relating to its employees, excluding programs and
policies required to be maintained by law; and (v) all plans, programs,
agreements and other arrangements of the Company with or relating to its
employees which contain change in control provisions. Neither the Company nor
any member of its controlled group within the meaning of Sections 414(b)and
414(c) of the Code is obligated to make any payments or to become party to any
contract that could obligate it to make any payments that would be disallowed as
a deduction under Section 280G or 162(m) of the Code.
Section 2.12. Labor Matters. Except as set forth in Section 2.12 of the Company
Disclosure Schedule: (i) there are no claims or proceedings pending or
threatened between the Company and any of its employees; (ii) the Company is not
a party, nor has ever been a party, to any collective bargaining agreement or
other labor union contract applicable to persons employed by the Company, nor
does the Company know of any activities or proceedings of any labor union to
organize any such employees; and (iii) the Company has no knowledge of any
strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any employees of the Company. The Company and each member of its
controlled group within the meaning of Sections 414(b) and 414(c) of the Code is
in material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, the Immigration Reform and Control Act, the
Worker Adjustment and Training Notification Act, any such laws respecting
employment discrimination, disability rights or benefits, equal opportunity,
plant closure issues, affirmative action, workers' compensation, employee
benefits, severance payments, labor relations, employee leave issues, wage and
hour standards, the misclassification of independent contractors as employees,
occupational safety and health requirements, and unemployment insurance.
Section 2.13. Registration Statement: Proxy Statement/Prospectus. None of the
information supplied by the Company for inclusion or incorporation by reference
in the Registration Statement (as defined in Section 3.13) will at the time the
Registration Statement (including any amendments and supplements thereto) is
filed with the SEC and when declared effective by the SEC under the Securities
Act of 1933, as amended (the "Act") contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements included therein not misleading. None
of the information supplied by the Company for inclusion or incorporation by
reference in the proxy statement/prospectus of the Company to be sent to the
stockholders of the Company in connection with the meeting of the stockholders
of the Company to consider the Merger (the "Company Stockholders' Meeting") and
the proxy statement/prospectus of Parent to be sent to the stockholders of
Parent (which shall also constitute the prospectus in respect of Parent Common
Stock to be exchanged for Shares) in connection with the meeting of the
stockholders of Parent to consider the Merger (the "Parent Stockholders'
Meeting," and together with the Company Stockholders' Meeting, the "Stockholders
Meetings") (such proxy statements/prospectuses as amended or supplemented are
collectively referred to herein as the "Proxy Statements"), will, on the date
the Proxy Statements (or any amendment thereof or supplement thereto) are first
mailed to stockholders, at the time of the Stockholders Meetings, or at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, are false or misleading with respect
to any material fact, or will omit to state any material fact necessary in order
to make the statements made therein not false or misleading, or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Stockholders
Meetings which has become false or misleading. If at any time prior to the
Effective Time any event relating to the Company or any of its respective
affiliates, officers or directors should be discovered by the Company which
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statements, the Company shall promptly inform Parent and
Merger Sub. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by Parent or Merger Sub
which is contained or incorporated by reference in any of the foregoing
documents.
Section 2.14. Title to Property. Except as set forth in Section 2.14 of the
Company Disclosure Schedule: (a) the Company has good and defensible title to
all of their properties and assets, free and clear of all Liens, charges and
encumbrances, except Liens for taxes not yet due and payable and such liens or
other imperfections of title, which do not constitute a Company Material Adverse
Effect; and (b) all leases pursuant to which the Company leases from others
material amounts of real or personal property, are in good standing, valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing material default or event of default (or event
which with notice or lapse of time, or both, would constitute a material
default), except where the lack of such good standing, validity and
effectiveness or the existence of such default or event of default does not
constitute a Company Material Adverse Effect.
Section 2.15. Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts, and governmental impositions or charges
of any kind in the nature of taxes, payable to any federal, state, local or
foreign taxing authority, including (without limitation) (i) income, franchise,
profits, gross receipts, ad valorem, net worth, value added, sales, use,
service, real or personal property, special assessments, capital stock, license,
payroll, withholding, employment, social security, workers' compensation,
unemployment compensation, utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes, and (ii)
interest, penalties, additional taxes and additions to tax imposed with respect
thereto; and "Tax Returns" shall mean returns, reports, and information
statements with respect to Taxes filed or required to be filed with the IRS or
any other federal, foreign, state or provincial taxing authority, domestic or
foreign, including, without limitation, consolidated, combined and unitary tax
returns and any amendments thereto.
(b) Other than as disclosed in Section 2.15(b) of the Company Disclosure
Schedule, (i) the Company has filed all United States federal income Tax Returns
and all other material Tax Returns required to be filed by it, (ii) the Company
has paid and discharged all Taxes due in connection with or with respect to the
periods or transactions covered by such Tax Returns and has paid all other Taxes
as are due, except such as are being contested in good faith by appropriate
proceedings (to the extent that any such proceedings are required)and with
respect to which the Company is maintaining adequate reserves, and (iii) there
are no other Taxes that would be due if asserted by a taxing authority, except
with respect to which the Company is maintaining reserves to the extent
currently required unless the failure to do so does not constitute a Company
Material Adverse Effect. Except as does not involve or would not result in
liability to the Company that constitutes a Company Material Adverse Effect: (i)
there are no tax liens on any assets of the Company; and (ii) the Company has
not granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. The accruals and reserves
for Taxes (including deferred taxes) reflected in the balance sheet of
theCompany as at December 31, 2000 are in all material respects adequate to
cover all Taxes required to be accrued through the date thereof (including
interest and penalties, if any, thereon and Taxes being contested) in accordance
with GAAP applied on a consistent basis with the 2000 Company Balance Sheet, and
the accruals and reserves for Taxes (including deferred taxes) reflected in the
books and records of the Company as at the last day of the Company's most
recently completed fiscal month end are in all material respects adequate to
cover all Taxes required to be accrued through such date (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with GAAP
applied on a consistent basis with the 2000 Company Balance Sheet.
(c) The Company is not, and has not been, a United States real property
holding corporation (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. To the best
knowledge of the Company, the Company does not own any property of a character,
the indirect transfer of which, pursuant to this Agreement, would give rise to
any material documentary, stamp or other transfer tax.
Section 2.16. Environmental Matters. Except as set forth in Section 2.16 of the
Company Disclosure Schedule, and except in all cases as, in the aggregate, does
not constitute a Company Material Adverse Effect, the Company: (i) has obtained
all Approvals which are required to be obtained under all applicable federal,
state, foreign or local
laws or any regulation, code, plan, order, decree, judgment, notice or demand
letter issued, entered, promulgated or approved thereunder relating to pollution
or protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants, or
hazardous or toxic materials or wastes into ambient air, surface water, ground
water, or land or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes
("Environmental Laws") by the Company or its agents; (ii) is in compliance with
all terms and conditions of such required Approvals, and also is in compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in applicable
Environmental Laws; (iii) as of the date hereof, is not aware of nor has
received notice of any past or present violations of Environmental Laws or any
event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to interfere with or prevent continued compliance
with Environmental Laws or which would give rise to any common law or statutory
liability, or otherwise form the basis of any claim, action, suit or proceeding,
against the Company based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) has taken all
actions necessary under applicable Environmental Laws to register any products
or materials required to be registered by the Company (or any of its agents)
thereunder.
Section 2.17. Intellectual Property.
(a) Set forth in Section 2.17(a) of the Company Disclosure Schedule is a
complete listing of each of the following items: (i) all patents and
applications therefor that are owned by the Company ("Company Owned Patent
Rights"), (ii) all patents and applications therefor that are licensed to the
Company ("Company Licensed Patent Rights"), and set forth in Schedule 2.17(e) is
a complete list of all Company's registrations and applications for all
registered and pending trademarks, service marks and copyrights ("Company Owned
Trademark and Copyright Rights") (Company Owned Patent Rights, Company Licensed
Patent Rights and Company Owned Trademark and Copyright Rights collectively
referred to herein as "Company Intellectual Property") (iii) all licenses,
sublicenses, agreements and contracts relating to the Company Intellectual
Property, pursuant to which the Company is entitled to make, use, sell or offer
to sell any Company Intellectual Property Rights or products related thereto,
(excluding commercially available end-user computer software licenses, where the
total license fees for such software do not exceed $500 per license per calendar
year, used in the ordinary course of business ("Commercial Software Licenses"))
and (iv) all licenses, sublicenses, material transfer, confidentiality and other
agreements and contracts under which the Company has granted any third party the
right to make, use, sell or offer to sell any Company Intellectual Property. The
Company has provided true and complete copies of all items, documents or
agreements set forth in Section 2.17(a) of the Company Disclosure Schedule.
(b) The Company is the sole and exclusive owner of the Company Owned
Patent Rights, free and clear of any liens, security interests or other
encumbrances, subject only to the scheduled licenses. The Company is the
exclusive or non-exclusive licensee, as applicable, of the Company Licensed
Patent Rights. All patents and patent applications of the Company Intellectual
Property are in good standing and there has been no adverse adjudication
relating to the validity and/or enforceability of any issued patent or issued
registration of the Company Intellectual Property.
(c) The Company is in compliance in all material respects with the
agreements listed in Schedule 2.17(a) and has not received notice and does not
know of any reason that would justify the licensor or licensee thereof, as
applicable, to assert material non-compliance, payments in arrears, or material
breach. The Company is not, and will not be as a result of the execution,
delivery, or performance of this Agreement or the consummation of the Merger or
the other transactions contemplated hereby, in breach, violation or default of
any such licenses.
(d) Except as set forth in Section 2.17(b) and 2.17(e) of the Company
Disclosure Schedule, no claims or disputes with respect to the Company
Intellectual Property have been asserted or, to the knowledge of the Company,
are threatened by any person that constitute a Company Material Adverse Effect
(i) to the effect that the manufacture, sale, licensing, or use of PT-100 as now
manufactured, sold or licensed or used or proposed for
manufacture, use, sale or licensing by the Company infringes on any rights of a
third party, (ii) against the use by the Company of any trademarks, service
marks, trade names, trade secrets, copyrights, patents, technology or know-how
and applications used in the business of the Company as currently conducted or
as proposed to be conducted, (iii) challenging the ownership by the Company or
the validity or enforceability of any of the Company Intellectual Property; or
(iv) to the best knowledge of the Company, to the effect that the manufacture,
sale, licensing, or use of any product as now manufactured, sold or licensed or
used or proposed for manufacture, use, sale or licensing by a third party
infringes on any Company Intellectual Property. No Company Intellectual Property
or product of the Company is subject to any outstanding decree, order, judgment,
or stipulation restricting in any manner the licensing thereof by the Company.
(e) The Company is authorized by The Commonwealth of Massachusetts to do
business under the name "Point Therapeutics Inc."
Section 2.18. Insurance. The Company maintains fire and casualty, general
liability, product liability, employee benefits liability and directors and
officers insurance policies with reputable insurance carriers, which provide
full and adequate coverage for all normal risks incident to the business of the
Company and its respective properties and assets and are in character and amount
similar to that carried by entities engaged in similar business and subject to
the same or similar perils or hazards.
Section 2.19. Brokers. No broker, finder or investment banker or other party is
entitled to any brokerage, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or affiliates.
Section 2.20. Change in Control Payments. Except as set forth on Section 2.20
of the Company Disclosure Schedule, the Company does not have any plans,
programs or agreements to which it is a party, or to which it is subject,
pursuant to which payments (or acceleration of benefits) may be required upon,
or may become payable directly or indirectly as a result of, a change of control
of the Company.
Section 2.21. Voting Requirements. The affirmative vote of at least two-thirds
of the outstanding shares of Company Common Stock and the holders of at least
two-thirds of the outstanding shares of Company Preferred Stock entitled to vote
thereon as described in Section 5.2 hereof with respect to the approval of the
Merger is the only vote of the holders of any class or series of the Company's
capital stock or other securities necessary to approve this Agreement, the
Merger and the other transactions contemplated by this Agreement.
Section 2.22. Unlawful Payments and Contributions. To the knowledge of the
Company, neither the Company nor any of its respective directors, officers or
any of their respective employees or agents has (i) used any Company funds for
any unlawful contribution, endorsement, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee;
(iii) violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any person.
Section 2.23. Affiliate Transactions. Except to the extent disclosed in Section
2.23 of the Company Disclosure Schedule, there are no transactions, agreements,
arrangements or understandings between the Company, on the one hand, and the
Company's affiliates (other than wholly-owned Subsidiaries of the Company), on
the other hand ("Company Affiliate Agreements"). Except to the extent disclosed
in Section 2.23 of the Company Disclosure Schedule, since December 31, 1997 no
payments have been made to any affiliate of the Company other than as
specifically required by the Company Affiliate Agreements, no payments will be
made in connection with this Agreement (except as provided for herein) and,
after consummation of the Merger, the Company shall not have any obligations or
liabilities to any affiliate or officer or director of the Company.
Section 2.24. Disclosure. No representation or warranty made by the Company in
this Agreement, nor any statement contained in any certificate, schedule or
other document or instrument delivered by the Company or its representatives
pursuant hereto, contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
made.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and warrant
to the Company as follows:
Section 3.1. Organization and Qualification; Subsidiaries. Each of Parent and
each of its subsidiaries (as listed in Section 3.1 of Parent Disclosure
Schedule) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation, as the
case may be, and has the requisite corporate power and authority and is in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to have such Approvals does not
constitute a Parent Material Adverse Effect. Each of Parent and each of its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that do not constitute a
Parent Material Adverse Effect.
Section 3.2. Certificate of Incorporation and By-laws. Parent has heretofore
furnished or made available to the Company a complete and correct copy of the
Certificate of Incorporation and by-laws, as most recently restated and amended
to date, of Parent and each of its direct and indirect subsidiaries. Such
Certificates of Incorporation and by-laws are in full force and effect. Neither
Parent nor any of its direct or indirect subsidiaries is in violation of any of
the provisions of its Certificate of Incorporation or by-laws.
Section 3.3. Capitalization.
(a) The authorized capital stock of Parent consists of (1) 35,000,000
shares of Parent Common Stock and (2) 1,000,000 shares of preferred stock, $.01
par value per share ("Parent Preferred Stock"). As of the date of this
Agreement, 18,891,897 shares of Parent Common Stock were issued and outstanding,
all of which were validly issued, and are fully paid and nonassessable, no
shares were held in treasury, (ii) no shares of Parent Preferred Stock were
issued and outstanding, none of which were held in treasury, (iii) 2,500,000
shares of Parent Common Stock were reserved for future issuance pursuant to
outstanding stock options granted under Parent's stock option and employee stock
purchase; (iv) options to purchase 1,745,500 shares of Parent Common Stock have
been granted under Parent's stock option and employee stock purchase plans; and
(v) 2,367,000 shares of Parent Common Stock were reserved for issuance upon the
exercise of Parent warrants. Except as set forth in this Section 3.3 or Section
3.11 of the written disclosure schedule delivered on or prior to the date hereof
by Parent to the Company that is arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article III (the "Parent
Disclosure Schedule"), there are no options, warrants, calls, subscriptions or
other rights, agreements, arrangements or commitments of any character which
either (i) obligate Parent to issue, sell, transfer, repurchase, redeem or
otherwise acquire or vote any shares of capital stock of, or other equity
interests in, Parent or (ii) restrict or limit the voting, disposition or other
transfer of any shares of capital stock of Parent. There are no outstanding
stock appreciation rights or similar derivative securities or rights of Parent.
Except as set forth in Section 3.3 of Parent Disclosure Schedule, there are no
obligations, contingent or otherwise, of Parent or any of its subsidiaries to
provide funds to or make any investment (in the form of a loan, capital
contribution, guaranty or otherwise) in any other entity. Except for shares of
Merger Sub and the subsidiaries named in Section 3.3 of the Parent Disclosure
Schedule, Parent does not own, directly or indirectly, any equity securities, or
options, warrants or other rights to acquire equity securities, or securities
convertible into or exchangable for equity securities, of any other corporation,
trust or other entity nor any partnership interest in any general or limited
partnership or unincorporated joint venture. No bonds, debentures, notes or
other indebtedness having the right to vote (or convertible into securities
having the right to vote) on any matters which stockholders may vote are issued
and outstanding. Section 3.3 of the Parent
Disclosure Schedule includes a complete and correct list setting forth as of the
date hereof (i) the number of warrants and options of the Parent outstanding,
(ii) the dates on which such warrants and options were granted, (iii) the name
of the holders of such warrants and options and (iv) the exercise price of each
such warrant and option. Parent has delivered or made available to the Company
complete and correct copies of all stock option and similar plans of Parent, all
forms of Options issued thereunder and copies of all warrants and warrant
agreements of Parent.
(b) The authorized stock of Merger Sub consists of 1,000 shares of
common stock, par value $.01 per share, all of which were duly authorized, and
are validly issued, fully paid and nonassessable and free of any preemptive
rights in respect thereof, and all of which are owned by Parent.
(c) The authorized capital stock of HemaPharm Inc., a Delaware
corporation is (i) 12,000,000 shares of common stock, par value $.01 per share,
1,000,000 of which were duly authorized and are validly issued, fully paid and
nonassessable and free of any preemptive rights in respect thereof, and each
issued and outstanding share is owned by Parent and (ii) 2,000,000 shares of
preferred stock, par value $.01 per share, none of which are outstanding.
(d) The authorized capital stock of HemaSure AB, a Swedish Corporation
is 500 common shares, par value 100 SEK per share, all of which were duly
authorized and are validly issued, fully paid and nonassessable and free of any
preemptive rights in respect thereof, and all of which are owned by Parent.
(e) All of the issued and outstanding shares of capital stock of
HemaSure A/S were duly authorized and are validly issued, fully paid and
nonassessable and free of any preemptive rights in respect thereof, and each
such issued and outstanding share of capital stock is owned by Parent or
HemaPharm Inc., a wholly owned subsidiary of Parent.
(f) There are no outstanding options, warrants or other rights to
purchase, or securities convertible into or exchangeable for, shares of the
capital stock of Merger Sub, HemaPharm Inc., HemaSure AB, or HemaSure A/S (each
a "Subsidiary"), and there are no agreements or commitments to which any
Subsidiary is a party or by which a Subsidiary is bound pursuant to which a
Subsidiary may be required to issue additional shares of its capital stock.
(g) The shares of Parent Common Stock to be issued pursuant to the
Merger in accordance with Section 1.6 (i) will be duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive or similar
rights created by statute, the Certificate of Incorporation or by-laws of Parent
or any agreement to which Parent is a party or is bound and (ii) will, when
issued, be registered under the Securities Act and registered or exempt from
registration under applicable Blue Sky Laws.
Section 3.4. Authority Relative to this Agreement.
(a) Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Parent and
Merger Sub, and no other corporate proceedings on the part of Parent or Merger
Sub (other than the approval of the issuance of Parent Common Stock in the
Merger by the affirmative vote of the holders of a majority of the voting power
of the shares of Parent Common Stock present in person, or represented by proxy,
and entitled to vote thereon at the meeting of holders of Parent Common Stock to
be called therefor, provided that the shares so present or represented
constitute a majority of the outstanding shares of Parent Common Stock and the
affirmative vote of the holders of a majority of the voting power of the shares
of Parent Common Stock present in person, or represented by proxy, and entitled
to vote thereon at the meeting of the holders of Parent Common Stock to be
called therefor) are necessary to authorize this Agreement or to consummate the
transactions contemplated thereby. The Board of Directors of Parent has
determined that it is advisable and in the best interest of Parent's
stockholders for Parent to enter into a business combination with the Company
upon the terms and subject to the conditions of this Agreement. This Agreement
has been duly and validly executed and delivered by Parent and Merger Sub and,
assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of Parent and Merger Sub
enforceable against each of them in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting the enforcement
of creditors' rights generally and by general principles of equity, regardless
of whether such enforceability is considered in a proceeding in law or in
equity.
(b) Each of the Board of Directors of Parent and Merger Sub has duly and
validly approved and taken all corporate action required to be taken by each
Board of Directors for the consummation of the transactions contemplated by this
Agreement including, but not limited to, all actions necessary to render the
provisions of Section 203 of the DGCL inapplicable to this Agreement and the
Merger. Each of the Board of Directors of Parent and Merger Sub have determined
that it is advisable and in the best interests of the stockholders of each of
Parent and Merger Sub for Parent and Merger Sub to enter into the Merger with
the Company upon the terms and subject to the conditions of this Agreement, and
has recommended that the stockholders of Parent and Merger Sub approve and adopt
this Agreement and the Merger.
Section 3.5. Noncontravention; Required Filings and Consents.
(a) The exhibit index to Parent's most recently filed Annual Report on
Form 10-K, as supplemented by Section 3.5(a) of Parent Disclosure Schedule,
includes each material contract (including all amendments thereto) to which
Parent or any of its subsidiaries is a party or by which any of them is bound
and which would be required pursuant to the Exchange Act and the rules and
regulations thereunder to be filed as an exhibit to an Annual Report on Form
10-K, a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
(b) Except as disclosed in Section 3.5(b) of Parent Disclosure Schedule,
(i) neither Parent nor any of its subsidiaries has breached, is in default
under, or has received written notice of any breach of or default under, any of
the agreements, contracts or other instruments referred to in Section 3.5(a),
(ii) to the best knowledge of Parent, no other party to any of the agreements,
contracts or other instrument referred to in Section 3.5(a) has breached or is
in default of any of its obligations thereunder, and (iii) each of the
agreements, contracts and other instruments referred to in Section 3.5(a) is in
full force and effect, except in any such case for breaches, defaults or
failures to be in full force and effect that do not constitute a Parent Material
Adverse Effect.
(c) Except as set forth in Section 3.5(c) of Parent Disclosure Schedule,
the execution and delivery of this Agreement by Parent and Merger Sub do not,
and the performance of this Agreement by Parent and Merger Sub and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate the Certificate of Incorporation or by-laws of Parent or Merger Sub,
(ii) conflict with or violate any Laws applicable to Parent or any of its
subsidiaries or by which its or their respective properties are bound or
affected, or (iii) conflict with or result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or impair Parent's or any of its subsidiaries' rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of Parent or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or any of its subsidiaries is a party or by which Parent or any
of its subsidiaries or its or any of their respective properties are bound or
affected, except in the case of clauses (ii) or (iii) for any such conflicts,
violations, breaches, defaults or other occurrences that do not constitute a
Parent Material Adverse Effect.
(d) Except as set forth in Section 3.5(d) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent and Merger Sub
does not, and the performance of this Agreement by Parent and Merger
Sub will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any domestic or foreign governmental or
regulatory authority, or third party, except (i) for applicable requirements, if
any, of the Securities Act, the Exchange Act, the Blue Sky Laws, and the filing
and recordation of appropriate merger or other documents as required by the
DGCL, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, and otherwise prevent Parent or
Merger Sub from performing their respective obligations under this Agreement,
and do not constitute a Parent Material Adverse Effect.
Section 3.6. Compliance with Applicable Laws, Permits.
(a) Except as disclosed in Section 3.6(a) of Parent Disclosure Schedule,
neither Parent nor any of its subsidiaries is in conflict with, or in default or
violation of, or has violated, (i) any Law applicable to Parent or its business
or any of its subsidiaries or by which its or any of their respective properties
is bound or affected or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or any of its subsidiaries is a party or by which Parent or any
of its subsidiaries or its or any of their respective properties is bound or
affected, except, in each case, for any such conflicts, defaults or violations
which do not constitute a Parent Material Adverse Effect.
(b) Except as disclosed in Section 3.6(b) of Parent Disclosure Schedule,
Parent and its subsidiaries hold all permits, licenses, easements, variances,
exemptions, consents, certificates, orders and approvals from governmental
authorities which are material to the operation of the business of Parent and
its subsidiaries taken as a whole as it is now being conducted (collectively,
the "Parent Permits"). Parent and its subsidiaries are in compliance with the
terms of Parent Permits, except where the failure to so comply does not
constitute a Parent Material Adverse Effect.
Section 3.7. SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents required to be
filed with the SEC and has heretofore delivered or made available to the
Company, in the form filed with the SEC, (i) its Annual Reports on Form 10-K for
the fiscal year ended December 31, 2000 (ii) its Quarterly Reports on Form 10-Q
for the periods ended March 31, 2001 and June 30, 2001, (iii) all proxy
statements relating to Parent's meetings of stockholders (whether annual or
special) since January 1, 1998, (iv) all other reports or registration
statements filed by Parent with the SEC since January 1, 1998, and (v) all
amendments and supplements to all such reports and registration statements filed
by Parent with the SEC ((i)-(v) collectively, the "Parent SEC Reports"). Parent
SEC Reports (i) were prepared in all material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of Parent's subsidiaries are required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in Parent SEC Reports has been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and each
fairly presents in all material respects the consolidated financial position of
Parent and its subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows and stockholder equity for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
Section 3.8. Absence of Certain Changes or Events. Except as set forth in
Section 3.8 of Parent Disclosure Schedule or in Parent SEC Reports, since June
1, 2001, Parent has conducted its business in the ordinary course and
in a manner consistent with past practice and there has not occurred any action
or event that would have required the consent of the Company pursuant to Section
4.3(a) through Section 4.3(j) had such action or event occurred after the date
of this Agreement.
Section 3.9. No Undisclosed Liabilities. Except for those liabilities that are
fully reflected or reserved against on Parent's audited balance sheet (including
any related notes thereto) as of December 31, 2000 included in Parent's Annual
Report on Form 10-K for the year ended December 31, 2000 (the "Parent Balance
Sheet") or as set forth in Section 3.9 of the Parent Disclosure Schedule, Parent
does not have (i) any liabilities or obligations of any material nature that
would be required by GAAP to be set forth on a balance sheet of Parent or in the
notes thereto or (ii) outstanding any liability or obligation of any nature
whatsoever (whether absolute, accrued, contingent, known or unknown or otherwise
and whether due or to become due), except in either case for liabilities and
obligations that have been incurred since the date of the Parent Balance Sheet
in the ordinary course of business consistent with past practices and that would
not reasonably be likely, individually or in the aggregate, to have a Parent
Material Adverse Effect.
Section 3.10. Absence of Litigation. Except as set forth in Section 3.10 of
Parent Disclosure Schedule, there are no Claims pending or, to the knowledge of
Parent, threatened (nor, to the knowledge of Parent, is there any basis for any
present or future material claim, action, suit, proceeding or investigation)
against Parent or any of its subsidiaries, or any properties or rights of Parent
or any of its subsidiaries, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign.
Section 3.11. Employee Benefit Plans, Employment Agreements.
(a) Section 3.11(a) of Parent Disclosure Schedule identifies any
employee pension plans (as defined in Section 3(2) of ERISA), any material
employee welfare plans (as defined in Section 3(1) of ERISA), and any material
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar fringe or employee benefit
plans, programs or arrangements (collectively, the "Parent Employee Plans")
which could result in any material liability of Parent or any member of its
controlled group within the meaning of Section 414(b) and 414(c) of the Code.
Except in each case as set forth in Section 3.11(a) of Parent Disclosure
Schedule or where the liability, individually or in the aggregate with respect
to the following, does not constitute a Parent Material Adverse Effect, (i)
there has been no breach of fiduciary duty or "prohibited transaction," as such
term is defined in section 406 of ERISA and Section 4975 of the Code, with
respect to any Company Employee Plans; (ii) all Parent Employee Plans have been
operated in accordance with their terms and are in compliance in all material
respects with the requirements prescribed by any and all Laws (including ERISA
and the Code), currently in effect with respect thereto (including all
applicable requirements for notification to participants or the PBGC, the IRS or
Secretary of the Treasury), and Parent and each of its subsidiaries have
performed all obligations required to be performed by them under, are not in any
material respect in default under or violation of, and have no knowledge of any
default or violation by any other party to, any of Parent Employee Plans; (iii)
each Parent Employee Plan intended to qualify under Section 401(a) of the Code
and each trust intended to qualify under Section 501(a) of the Code is the
subject of a favorable determination letter (or where no determination letter is
required, a favorable opinion letter) from the IRS, and nothing has occurred
which may reasonably be expected to impair such determination; (iv) all
contributions required to be made to any Parent Employee Plan pursuant to
Section 412 of the Code, or the terms of Parent Employee Plan or any collective
bargaining agreement, have been made on or before their due dates; (v) with
respect to each Parent Employee Plan, no "reportable event" within the meaning
of Section 4043 of ERISA (excluding any such event for which the 30-day notice
requirement has been waived under the regulations to Section 4043 of ERISA) nor
any event described in Section 4062, 4063 or 4041 of ERISA has occurred; (vi) no
Parent Employee Plan will cause or be reasonably expected to cause any liability
under Title IV of ERISA (other than liability for premium payments to the PBGC,
and contributions not in default to the respective plans, arising in the
ordinary course); (vii) Parent has not incurred, nor reasonably expects to
incur, any liability under Title IV of ERISA (other than liability for premium
payments to the PBGC, and contributions not in default to the respective plans,
arising in the ordinary course), and no Parent Employee subject to Title IV of
ERISA has terminated within the past six years; and (viii) neither Parent nor
any
member of its controlled group (within the meaning of Section 414(b) or 414(c)
of the Code) has ever contributed or had any obligation to a "multiemployer
plan" or a "multiple employer welfare plan" within the meaning of Sections
3(37)(A) or 3(40)(A) of ERISA .
(b) Section 3.11(b) of Parent Disclosure Schedule sets forth a true and
complete list of each current or former employee, officer or director of Parent
or any of its subsidiaries who holds (i) any option to purchase Parent Common
Stock as of the date hereof, together with the number of shares of Parent Common
Stock subject to such option, the option price of such option (to the extent
determined as of the date hereof), whether such option is intended to qualify as
an ISO within the meaning of Section 422(b) of the Code, and the expiration date
of such option; (ii) any other right, directly or indirectly, to acquire Parent
Common Stock, together with the number of shares of Parent Common Stock subject
to such right. Section 3.11(c) of Parent Disclosure Schedule also sets forth the
total number of such ISOs, such nonqualified options and such other rights.
(c) Section 3.11(c) of Parent Disclosure Schedule sets forth a true and
complete list of: (i) all employment agreements with officers of Parent or any
of its subsidiaries; (ii) all agreements with consultants who are individuals
obligating Parent or any of its subsidiaries to make cash payments in an amount
exceeding $10,000 annually; (iii) all employees of, or consultants to, Parent or
any of its subsidiaries who have executed a non-competition agreement with
Parent or any of its subsidiaries; (iv) all severance agreements, programs and
policies of Parent or any of its subsidiaries with or relating to its employees,
excluding programs and policies required to be maintained by law; and (v) all
plans, programs, agreements and other arrangements of Parent or any of its
subsidiaries with or relating to its employees which contain change in control
provisions. Neither Parent nor any member of its controlled group within the
meaning of Sections 414(b) and 414(c) of the Code is obligated to make any
payments or to become party to any contract that could obligate it to make any
payments that would be disallowed as a deduction under Section 280G or 162(m) of
the Code.
Section 3.12. Labor Matters. Except as set forth in Section 3.12 of Parent
Disclosure Schedule, (i) there are no claims or proceedings pending or
threatened between Parent or any of its subsidiaries and any of their respective
current or former employees, and (ii) neither Parent nor any of its subsidiaries
are parties, nor have ever been parties, to any collective bargaining agreement
or other labor union contract applicable to persons employed by Parent or any of
its subsidiaries. Parent and each member of its controlled group within the
meaning of Sections 414(b) and 414(c) of the Code is (and, during the past five
years, has been) in material compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, including, without limitation, the Immigration Reform and
Control Act, the Worker Adjustment and Training Notification Act, any such laws
respecting employment discrimination, disability rights or benefits, equal
opportunity, plant closure issues, affirmative action, workers' compensation,
employee benefits, severance payments, labor relations, employee leave issues,
wage and hour standards, the misclassification of independent contractors as
employees, occupational safety and health requirements, and unemployment
insurance.
Section 3.13. Registration Statement: Proxy Statement/Prospectus. Subject to
the accuracy of the representations of the Company in Section 2.13, the
registration statement pursuant to which Parent Common Stock to be issued in the
Merger will be registered with the SEC on Form S-4 (together with all amendments
thereto) (the "Registration Statement") shall not, at the time the Registration
Statement (including any amendments or supplements thereto) is filed with the
SEC and when declared effective by the SEC under the Act, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements included therein not misleading. None of the
information supplied by Parent for inclusion or incorporation by reference in
the Proxy Statements will, on the date the Proxy Statements (or any amendment
thereof or supplement thereto) are first mailed to stockholders, at the time of
the Stockholders Meetings or at the Effective Time, contain any statement which,
at such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or will omit to state any
material fact necessary in order to make the statements therein not false or
misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders Meetings which has become false or misleading. If
at any time prior to the Effective Time any event relating to Parent, Merger Sub
or
any of their respective affiliates, officers or directors should be discovered
by Parent or Merger Sub which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statements, Parent or Merger
Sub shall promptly inform the Company. Notwithstanding the foregoing, Parent and
Merger Sub make no representation or warranty with respect to any information
supplied by the Company which is contained or incorporated by reference in any
of the foregoing documents.
Section 3.14. Title to Property. Except as set forth in Section 3.14 of Parent
Disclosure Schedule: (a) Parent and each of its subsidiaries have good and
defensible title to all of their properties and assets, free and clear of all
Liens, charges and encumbrances, except Liens for taxes not yet due and payable
and such liens or other imperfections of title, which do not constitute a Parent
Material Adverse Effect; and (b) all leases pursuant to which Parent or any of
its subsidiaries lease from others material amounts of real or personal property
are in good standing, valid and effective in accordance with their respective
terms, and there is not, under any of such leases, any existing material default
or event of default (or event which with notice or lapse of time, or both, would
constitute a material default) except where the lack of such good standing,
validity and effectiveness or the existence of such default or event of default
does not constitute a Parent Material Adverse Effect.
Section 3.15. Taxes.
(a) Other than as disclosed in Section 3.15 of Parent Disclosure
Schedule, (i) Parent and its subsidiaries have filed all United States federal
income Tax Returns and all other material Tax Returns required to be filed by
them, (ii) Parent and its subsidiaries have paid and discharged all Taxes due in
connection with or with respect to the periods or transactions covered by such
Tax Returns and have paid all other Taxes as are due, except such as are being
contested in good faith by appropriate proceedings (to the extent that any such
proceedings are required) and with respect to which Parent is maintaining
adequate reserves, and (iii) there are no other Taxes that would be due if
asserted by a taxing authority, except with respect to which Parent is
maintaining reserves to the extent currently required unless the failure to do
so does not constitute a Parent Material Adverse Effect. Except as does not
involve or would not result in liability to Parent that constitutes a Parent
Material Adverse Effect: (i) there are no tax liens on any assets of Parent or
any subsidiary thereof; and (ii) neither Parent nor any of its subsidiaries has
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. The accruals and reserves
for Taxes (including deferred taxes) reflected in the balance sheet of Parent as
at June 30, 2001 included in Parent's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001 are in all material respects adequate to cover all
Taxes required to be accrued through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with GAAP
applied on a consistent basis with Parent Balance Sheet, and the accruals and
reserves for Taxes (including deferred taxes) reflected in the books and records
of Parent as at the last day of Parent's most recently completed fiscal month
end are in all material respects adequate to cover all Taxes required to be
accrued through such date (including interest and penalties, if any, thereon and
Taxes being contested) in accordance with GAAP applied on a consistent basis
with Parent Balance Sheet.
(b) Parent is not, and has not been, a United States real property
holding corporation (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. To the best
knowledge of Parent, Parent does not own any property of a character, the
indirect transfer of which, pursuant to this Agreement, would give rise to any
material documentary, stamp or other transfer tax. Section 3.16. Environmental
Matters. Except as set forth in Section 3.16 of Parent Disclosure Schedule, and
except in all cases as, in the aggregate, does not constitute a Parent Material
Adverse Effect, Parent and each of its subsidiaries: (i) have obtained all
Approvals which are required to be obtained under all applicable Environmental
Laws by Parent or its subsidiaries (or their respective agents); (ii) are in
compliance with all terms and conditions of such required Approvals, and also
are in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in applicable Environmental Laws; (iii) as of the date hereof are not
aware of nor have received notice of any past or present violations of
Environmental Laws, or any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to
interfere with or prevent continued compliance with Environmental Laws or which
would give rise to any common law or statutory liability, or otherwise form the
basis of any claim, action, suit or proceeding, against Parent or any of its
subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable Environmental Laws to register any products
or materials required to be registered by Parent or its subsidiaries (or any of
their respective agents) thereunder.
Section 3.17. Intellectual Property. Parent does not own, license or otherwise
possess legally enforceable rights to use any patents, trademarks, trade names,
services marks, copyrights, or any applications therefor, technology, know-how
or tangible or intangible proprietary information or material.
Section 3.18. Insurance. Section 3.18 of the Parent Disclosure Schedule sets
forth the following information with respect to each insurance policy to which
Parent and any of its subsidiaries are a party, a named insured, or otherwise
the beneficiary of coverage (collectively, the "Insured") on the date hereof:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the name
of each covered insured;
(c) the policy number, the period of coverage and premium; and
(d) a description of any retrospective premium adjustments or other
loss-sensitive premium arrangements.
With respect to each such insurance policy: (i) to Parent's knowledge, the
policy is valid, binding, enforceable, and in full force and effect; (ii) the
policy will continue to be valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby; (iii) neither Parent nor its Subsidiaries is in material
breach or default (including with respect to the payment of premiums or the
giving of notices); (iv) Parent has delivered or made available true and
complete copies of all policies and related indemnity or premium payment
agreements to the Company; (v) to Parent's knowledge, the policy has not been
amended or modified and no riders have been issued in respect of such policies
referred to in (iv) above without the consent of the Company; and (vi) no
payment has been made to Parent or any other person under the policy and no
notice of claim or potential claim under such policy has been given to the
insurer by Parent or other person or entity insured under such policy. Except as
set forth in Section 3.18 of the Parent Disclosure Schedule, no notice of actual
or potential claim has been given to any insurer under any other insurance
policy to which Parent was a party during the past three (3) years.
Section 3.19. Interested Party Transactions. Except as set forth in Section
3.19 of Parent Disclosure Schedule, since the date of Parent's proxy statement
dated April 27, 2001 no event has occurred that would be required to be reported
as a Certain Relationship or Related Transaction, pursuant to Item 404 of
Regulation S-K promulgated by the SEC.
Section 3.20. Opinion of Financial Advisor. Parent has received the opinion of
its financial advisor, L.E.K. Consulting LLC, that, as of the date hereof, the
Exchange Ratio is fair from a financial point of view to Parent's stockholders.
Section 3.21. Brokers. Except as set forth on Section 3.21 of Parent Disclosure
Schedule, no broker, finder or investment banker or other party is entitled to
any brokerage, finder's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Merger Sub or any of their subsidiaries or affiliates.
The fees and expenses of the entities listed on Section 3.21 of Parent
Disclosure Schedule will be paid by Parent. Parent has heretofore furnished or
made available to the
Company a complete and correct copy of all agreements between Parent and the
entities listed on Section 3.21 of Parent Disclosure Schedule pursuant to which
such firms would be entitled to any payment relating to the transactions
contemplated hereunder.
Section 3.22. Change in Control Payments. Except as set forth on Section 3.22
of the Parent Disclosure Schedule, neither Parent nor Merger Sub has any plans,
programs or agreements to which it is a party, or to which it is subject,
pursuant to which payments (or acceleration of benefits) may be required upon,
or may become payable directly or indirectly as a result of, a change of control
of Parent or Merger Sub.
Section 3.23. Voting Requirements. The affirmative vote of a majority of the
votes cast by the holders of the issued and outstanding shares of Parent Common
Stock entitled to vote thereon as described in Section 5.2 hereof with respect
to, (i) amending Parent's certificate of incorporation to increase the number of
authorized shares of Parent Common Stock, effect a reverse split with respect to
Parent Common Stock, and change the corporate name of Parent; and (ii) amending
Parent's 1994 Stock Option Plan to increase the number of shares issuable
thereunder are the only votes of the holders of any class or series of Parent's
capital stock or other securities necessary to approve the Merger and the other
transactions contemplated by this Agreement.
Section 3.24 Formation of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solel for the purpose of engaging in the
transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for obligations
or liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement and except for this Agreement
and any other agreements or arrangements contemplated by this Agreement, Merger
Sub has not and will not have incurred, directly or indirectly, through any
subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
Section 3.25. Disclosure. No representation or warranty made by Parent or
Merger Sub in this Agreement, nor any statement contained in any certificate,
schedule or other document or instrument delivered by Parent or Merger Sub or
their representatives pursuant hereto, contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were made.
ARTICLE IV. CONDUCT OF BUSINESS PENDING THE MERGER
Section 4.1. Conduct of Business by the Company Pending the Merger. Except as
expressly contemplated by this Agreement, the Company covenants and agrees that,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, unless
Parent shall otherwise agree in writing, the Company shall conduct its business
only in, and the Company shall not take any action except in, the ordinary
course of business and in a manner consistent with past practice; and the
Company shall use all reasonable efforts to preserve substantially intact the
business organization of the Company, to keep available the services of the
present officers, employees and consultants of the Company and to preserve the
present relationships of the Company with customers, suppliers and other persons
with which the Company has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement, the
Company shall not, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or agree to do, any of the following
without the prior written consent of Parent:
(a) amend or otherwise change the Certificate of Incorporation or
by-laws of the Company;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company (except for (i) the issuance of shares of Company Common Stock issuable
pursuant to Stock Options which were granted under the Company Stock Option
Plans and are outstanding on the date hereof and (ii) grants of Stock Options
under the Company Stock Option Plans for the purchase of a maximum of 50,000
shares of Company Common Stock granted to the individuals identified in Section
4.1(b) of the Company Disclosure Schedule).
(c) directly or indirectly sell, pledge, dispose of or encumber any
assets of the Company (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice, (ii) dispositions of
obsolete or worthless assets, and (iii) sales of immaterial assets not in excess
of $50,000 in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities or property in respect of, in lieu of or in substitution for shares
of its capital stock, or (iii) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, any of its
securities including, without limitation, shares of Company Common Stock or any
option, warrant or right, directly or indirectly, to acquire shares of Company
Common Stock, or provide that upon the exercise or conversion of any such
option, warrant or right the holder thereof shall receive cash, or propose to do
any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof other than those listed on Section 4.1(e) of the Company Disclosure
Schedule; (ii) incur any indebtedness for borrowed money or issue any debt
securities, or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any person or, except in the ordinary
course of business consistent with past practice in amounts not individually or
in the aggregate, in excess of $50,000, make any loans or advances; (iii) enter
into or amend any material contract or agreement (except as described on Section
4.1(e) of the Company Disclosure Schedule); (iv) authorize any capital
expenditures or purchase of fixed assets which are, in the aggregate, in excess
of $50,000 for the Company; or (v) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by this
Section 4.1(e), except, in each case, in connection with the executive
employment and consulting agreements described in Section 4.1(f) of the Company
Disclosure Schedule;
(f) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees of
the Company who are not officers of the Company in the ordinary course of
business in accordance with past practice, or grant any severance or termination
pay to, or enter into any employment or severance agreement with any director,
officer or other employee of the Company, or, except as described in Section
4.1(f) of the Company Disclosure Schedule, establish, adopt, enter into or amend
any collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any current or former directors, officers or
employees, except, in each case, as may be required by law and except, in each
case, in connection with the executive employment and consulting agreements
described in Section 4.1(f) of the Company Disclosure Schedule;
(g) except as may be required as a result of a change in law or in GAAP,
take any action to change accounting policies or procedures (including, without
limitation, procedures with respect to revenue recognition, payments of accounts
payable and collection of accounts receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the Company's financial statements or incurred in the ordinary course of
business and consistent with past practice;
(j) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, or other reorganization; or
(k) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1 (a) through (j) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect in any material respect or prevent the Company
from performing or cause the Company not to perform its covenants hereunder.
Section 4.2. Company Extraordinary Transactions.
(a) The Company shall not consummate or execute an agreement to
consummate any merger, sale of material assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transactions
involving the Company other than the Merger (any of the foregoing transactions
being referred to herein as a "Company Extraordinary Transaction"). The Company
shall not, directly or indirectly, through any officer, director, employee,
representative or agent of the Company, (i) solicit, initiate or encourage the
initiation or continuation of any inquiries or proposals regarding, or engage in
negotiations or discussions concerning, or provide any nonpublic information to
any person relating to, any Company Extraordinary Transaction that, if
consummated, would be in lieu of the Merger (an "Alternative Company
Extraordinary Transaction"). Notwithstanding anything in this Agreement to the
contrary, the Company is expressly permitted to (i) solicit, initiate and
encourage the initiation of preliminary, non-binding inquiries and proposals
regarding Company Extraordinary Transactions that are not Alternative Company
Transactions and (ii) engage in preliminary, non-binding negotiations or
discussions concerning, or provide any nonpublic information to any person
relating to, any Company Extraordinary Transaction that is not an Alternative
Company Extraordinary Transaction; provided, however, that in no event shall the
Company take any action whatsoever pursuant to the foregoing clauses (i) and
(ii) that (x) would require the Company to make a public disclosure under any
circumstances and at any time were the Company a public reporting company under
the Exchange Act or under the Securities Act, or (y) would require Parent to
amend or supplement any filing made with the SEC made by Parent on of after the
date hereof.
(b) The Company shall immediately notify Parent after receipt of any
written proposal for, or any oral proposal reasonably likely to result in the
consummation of, an Alternative Company Extraordinary Transaction or a Company
Extraordinary Transaction (each referred to herein as a "Company Proposal"), or
any modification of or amendment to any Company Proposal, or any request for
nonpublic information relating to the Company in connection with a Company
Proposal or for access to the properties, books or records of the Company by any
person or entity that informs the Board of Directors of the Company that it is
considering making, or has made, a Company Proposal. Such notice to Parent shall
be made orally and in writing, and shall indicate the material terms of such
proposal (including the identity of the parties making such proposal) and
whether the Company is providing or intends to provide the person making the
Company Proposal with access to information concerning the Company as provided
in Section 4.2(c); provided, however, that the Company shall not be obligated to
disclose the material terms of such proposal (including the identity of the
parties making such proposal) if such disclosure would violate the terms of any
confidentiality agreement entered into by the Company prior to the date of this
Agreement.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than Parent and
Merger Sub) conducted heretofore with respect to any proposal
for an Alternative Company Extraordinary Transaction. The Company agrees not to
release any third party from the confidentiality provisions of any
confidentiality agreement to which the Company is a party.
(d) The Company shall ensure that the officers, directors and employees
of the Company and any investment banker or other advisor or representative
retained by the Company are aware of the restrictions described in this Section
4.2.
Section 4.3. Conduct of Business by Parent Pending the Merger. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Parent covenants and agrees
that, unless the Company shall otherwise agree in writing, Parent shall not
conduct any business other than actions taken by Parent or its subsidiaries in
contemplation of the Merger and actions necessary to maintain the corporate
existence of Parent and to keep the SEC filings of Parent current, and Parent
shall use all reasonable efforts to preserve substantially intact the property
and assets of Parent and its subsidiaries, and to keep available all services of
the present officers, employees and consultants of Parent and its subsidiaries.
By way of amplification and not limitation, except as contemplated by this
Agreement, neither Parent nor any of its subsidiaries shall, during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, directly or indirectly do,
or agree to do, any of the following without the prior written consent of the
Company:
(a) amend or otherwise change Parent's Certificate of Incorporation or
by-laws or similar organizational documents of any of its subsidiaries;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in
Parent or any of its subsidiaries (except for the issuance of shares of Parent
Common Stock issuable pursuant to Stock Options which were granted under Parent
Stock Option Plans and are outstanding on the date hereof).
(c) directly or indirectly sell, pledge, dispose of or encumber any
assets of Parent or any of its subsidiaries (except for sales or dispositions of
cash or cash equivalents to the extent necessary to pay expenses of Parent in
connection with the transactions contemplated by this Agreement, maintain the
corporate existence of Parent and to conduct its operations as presently
conducted);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary of
Parent may declare and pay a dividend to Parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities or property in respect of, in lieu of or in
substitution for shares of its capital stock, or (iii) amend the terms or change
the period of exercisability of, purchase, repurchase, redeem or otherwise
acquire, or permit any subsidiary to purchase, repurchase, redeem or otherwise
acquire, any of its securities or any securities of its subsidiaries, including,
without limitation, shares of Parent Common Stock or any option, warrant or
right, directly or indirectly, to acquire shares of Parent Common Stock, or
provide that upon the exercise or conversion of any such option, warrant or
right the holder thereof shall receive cash, or propose to do any of the
foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any indebtedness for borrowed money or issue any debt
securities, except for intercompany indebtedness between Parent and any of its
wholly owned subsidiaries or between such wholly owned subsidiaries, or assume,
guarantee or endorse or otherwise as an accommodation become responsible for,
the obligations of any person or make any loans or advances; (iii) enter into or
amend any material contract or agreement (except as described on Section 4.3(e)
of Parent Disclosure Schedule);
(iv) authorize any capital expenditures or purchase of fixed assets; or (v)
enter into or amend any contract, agreement, commitment or arrangement to effect
any of the matters prohibited by this Section 4.3(e);
(f) increase the compensation payable or to become payable to its
officers or employees or grant any severance or termination pay to, or enter
into any employment or severance agreement with any director, officer or other
employee of Parent or any of its subsidiaries, or establish, adopt, enter into
or amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any current or former directors, officers or
employees, except, in each case, as may be required by law;
(g) except as may be required as a result of a change in law or in GAAP,
take any action to change accounting policies or procedures (including, without
limitation, procedures with respect to revenue recognition, payments of accounts
payable and collection of accounts receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements contained in Parent SEC Reports filed prior to the date
of this Agreement or incurred in the ordinary course of business and consistent
with past practice;
(j) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, or other reorganization; or
(k) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.3 (a) through (j) above, or any action which would make
any of the representations or warranties of Parent contained in this Agreement
untrue or incorrect in any material respect or prevent Parent from performing or
cause Parent not to perform its covenants hereunder.
Section 4.4. No Solicitation by Parent.
(a) Parent shall not, directly or indirectly, through any officer,
director, employee, representative or agent of Parent or any of its
subsidiaries, (i) solicit, initiate or encourage the initiation of any inquiries
or proposals regarding any merger, sale of material assets, sale of shares of
capital stock (including without limitation by way of a tender offer) or similar
transactions involving Parent or any subsidiaries of Parent other than the
Merger (any of the foregoing inquiries or proposals being referred to herein as
a "Parent Acquisition Proposal"), (ii) engage in negotiations or discussions
concerning, or provide any nonpublic information to any person relating to, any
Parent Acquisition Proposal or (iii) agree to, approve or recommend any Parent
Acquisition Proposal. Notwithstanding any provisions herein to the contrary, in
the event that Parent shall receive a bona fide, written Parent Acquisition
Proposal that was not solicited by it and did not otherwise result from a breach
of this Section 4.4(a), Parent may (i) furnish information with respect to it
and its subsidiaries to the person that made such Parent Acquisition Proposal
and (ii) participate in discussions and negotiations regarding such Parent
Acquisition Proposal; provided, however, that Parent shall be permitted to take
the actions referred to in the preceding clauses (i) or (ii) only if (a) Parent
gives the Company advance notice as soon as reasonably practical of its
intention to take any such action, (b) the Board of Directors of Parent
determines in good faith (upon advice of outside legal counsel) that it is
required to do so in order to discharge properly its fiduciary duties and (c)
the Board of Directors of Parent (after consulting with its financial advisors)
concludes in good faith that such Parent Acquisition Proposal provides a
reasonable probability of offering terms more favorable to Parent and its common
stockholders from a financial point of view than the
Merger, taking into account such factors that are deemed relevant by the Board
of Directors of Parent, including without limitation (1) the relative terms and
conditions of such Parent Acquisition Proposal and the Merger, (2) all other
legal, financial, regulatory and other aspects of such Parent Acquisition
Proposal and the Merger, (3) the identity of the person proposing such Parent
Acquisition Proposal, (4) the determination by the Parent's Board of Directors
as to whether such Parent Acquisition Proposal is reasonably capable of being
completed and (5) whether financing for such Parent Acquisition Proposal, to the
extent required, as reasonably determined by Parent's Board of Directors, will
be available (a Parent Acquisition Proposal meeting the foregoing criteria on
its most recently amended or modified terms, if amended or modified, a "Superior
Parent Proposal"). Nothing contained in this Section 4.4 shall prohibit the
Board of Directors of Parent from complying with Rule 14e-2 promulgated under
the Exchange Act with regard to a tender or exchange offer.
(b) Parent shall immediately notify the Company after receipt of any
Parent Acquisition Proposal, or any modification of or amendment to any Parent
Acquisition Proposal, or any request for nonpublic information relating to
Parent or any of its subsidiaries in connection with a Parent Acquisition
Proposal or for access to the properties, books or records of Parent or any
subsidiary by any person or entity that informs the Board of Directors of Parent
or such subsidiary that it is considering making, or has made, a Parent
Acquisition Proposal. Such notice to the Company shall be made orally and in
writing.
(c) Parent shall provide the Company with a copy of any Parent
Acquisition Proposal received by it and each revised version of such Parent
Acquisition Proposal promptly after, and in any event within twenty-four hours
of, receipt by Parent of such Parent Acquisition Proposal or revision and shall
otherwise keep the Company reasonably informed of the status of such discussions
(including providing the Company copies of proposed documents). Any information
furnished to the person that made such Parent Acquisition Proposal shall be
furnished promptly by Parent to the Company unless such information shall have
previously have been furnished to the Company, any such information shall be so
furnished to such person pursuant to a confidentiality agreement generally no
less favorable to Parent than the terms of the Confidentiality Agreement. Parent
shall inform all relevant persons of the obligations undertaken by it in this
Section 4.4.
(d) Parent shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than the Company
and Merger Sub) conducted heretofore with respect to any of the foregoing.
Parent agrees not to release any third party from the confidentiality provisions
of any confidentiality agreement to which Parent is a party.
(e) Parent shall ensure that the officers, directors and employees of
Parent and its subsidiaries and any investment banker or other advisor or
representative retained by Parent are aware of the restrictions described in
this Section 4.4.
(f) Parent's Board of Directors shall not withdraw or modify, or propose
to withdraw or modify, in a manner adverse to the Company its approval or
recommendation of the Merger or the Parent Stockholder Actions in response to a
Superior Parent Proposal or any other Parent Acquisition Proposal unless
Parent's Board of Directors determines in good faith, in accordance with the
provisions set forth in Section 4.4(a), that such Point Acquisition Proposal is
a Superior Parent Proposal and determines in good faith, and upon the advice of
outside legal counsel, that the failure to take such action would be
inconsistent with its fiduciary duties to Parent's stockholders under applicable
law.
ARTICLE V. ADDITIONAL AGREEMENTS
Section 5.1. Proxy Statements; Registration Statement.
(a) As promptly as reasonably practicable after the execution of this
Agreement, (i) Parent shall prepare and file with the SEC a preliminary proxy
statement (together with any amendments thereof or supplements thereto, the
"Parent Proxy Statement") relating to the Merger and the transactions
contemplated by this Agreement, (ii) the Company shall prepare a proxy statement
(together with any amendments thereof or supplements thereto, the "Company Proxy
Statement") relating to the Company Stockholders' Meeting, and (iii) Parent
shall prepare and file the Registration Statement in which the Parent Proxy
Statement shall be included as a prospectus, in connection with the registration
under the Securities Act of the shares of Parent Common Stock to be issued to
the stockholders of the Company pursuant to the Merger. Each of Parent and the
Company shall use its reasonable best efforts to cause the Registration
Statement to become effective as promptly as practicable, and prior to the
effective date of the Registration Statement, Parent shall take all or any
action required under any applicable federal or state securities laws in
connection with the issuance of Parent Common Stock pursuant to the Merger. The
Company shall furnish all information concerning the Company as Parent may
reasonably request in connection with such actions and the preparation of the
Registration Statement and the Parent Proxy Statement. Parent shall furnish all
information concerning Parent as the Company may reasonably request in
connection with such actions and the preparation of the Company Proxy Statement.
As promptly as practicable after the Registration Statement shall have become
effective, Parent shall mail the Parent Proxy Statement to its stockholders and
the Company shall mail the Company Proxy Statement to its stockholders.
(b) No amendment or supplement to the Parent Proxy Statement or the
Company Proxy Statement or the Registration Statement will be made by Parent or
the Company without the approval of the other party (such approval not to be
unreasonably withheld or delayed). Each of Parent and the Company will advise
the other, promptly after it receives notice thereof, of the time at which the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, of the suspension of the
qualification of the Parent Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or of any request by the SEC for
amendment of the Parent Proxy Statement or the Registration Statement or
comments thereon and responses thereto or requests by the SEC for additional
information.
(c) The information supplied by Parent for inclusion in the Registration
Statement and the Company Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Company Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company, (iii) the time of the Company Stockholders'
Meeting and (iv) the Effective Time, contain any untrue statement of a material
fact or fail 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. If, at any time prior to the
Effective Time, any event or circumstance relating to Parent or any of its
subsidiaries, or their respective officers or directors, that should be set
forth in an amendment or a supplement to the Registration Statement or Company
Proxy Statement should be discovered by Parent, Parent shall promptly inform the
Company thereof. All documents that Parent is responsible for filing with the
SEC in connection with the Merger or the other transactions contemplated by this
Agreement will comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder.
(d) The information supplied by the Company for inclusion in the
Registration Statement and the Parent Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the Parent Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of Parent, (iii) the time of the Parent Stockholders' Meetings
and (iv) the Effective Time, contain any untrue statement of a material fact or
fail 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. If, at any time prior to the Effective Time, any
event or circumstance relating to the Company, or its officers or directors,
that should be
set forth in an amendment or a supplement to the Registration Statement or the
Parent Proxy Statement should be discovered by the Company, the Company shall
promptly inform Parent.
Section 5.2. Stockholders Meetings. The Company and Parent shall call and hold
their respective Stockholders Meetings as promptly as reasonably practicable and
in accordance with applicable laws for the purpose of voting upon the approval
of the Merger and the adoption of the Merger Agreement, in the case of the
Company's stockholders, and the approval of the Parent Stockholder Actions, in
the case of Parent's stockholders, and Parent and the Company shall use their
reasonable best efforts to hold the Stockholders Meetings on the same day (and
at the same time of such day) and as soon as reasonably practicable after the
date on which the Registration Statement becomes effective. Unless otherwise
required under the applicable fiduciary duties of the respective directors of
the Company and Parent, as determined by such directors in good faith after
consultation with and based upon the written advice of their respective outside
legal counsel, the Company and Parent shall (i) recommend approval of the
transactions contemplated by this Agreement by the stockholders of Parent and
the Company, respectively, and include in the Proxy Statements such
recommendation and (ii) use all reasonable efforts to solicit from their
respective stockholders proxies in favor of adoption of this Agreement and
approval of the transactions contemplated hereby and, in the case of Parent, the
Parent Stockholder Actions, and each party shall take all other action necessary
or advisable to secure the vote or consent of stockholders to obtain such
approvals and will otherwise comply with all legal requirements applicable to
such meetings.
Section 5.3. Access to Information; Confidentiality. Upon reasonable notice
and subject to restrictions contained in confidentiality agreements to which
such party is subject (from which such party shall use reasonable efforts to be
released), the Company and Parent shall each (and shall cause each of their
subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other, reasonable access, during the period prior
to the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, the Company and Parent each shall (and shall
cause each of their subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as such other
party may reasonably request, and each shall make available to the other the
appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties and personnel
as either Parent or the Company may reasonably request. Each party shall keep
such information confidential in accordance with the terms of the
Confidentiality Agreement, dated February 27, 2001 (the "Confidentiality
Agreement"), among Parent, the Company and L.E.K. Consulting, LLC.
Section 5.4. Consents; Approvals. The Company and Parent shall each use all
reasonable efforts to obtain all consents, waivers, approvals, authorizations or
orders (including, without limitation, all United States governmental and
regulatory rulings and approvals), and the Company and Parent shall make all
filings (including, without limitation, all filings with United States
governmental or regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by the Company and
Parent and the consummation by them of the transactions contemplated hereby, in
each case as promptly as practicable. The Company and Parent shall furnish
promptly all information required to be included in the Proxy Statements and the
Registration Statement, or for any application or other filing to be made
pursuant to the rules and regulations of any United States or foreign
governmental body in connection with the transactions contemplated by this
Agreement.
Section 5.5. Agreements with Respect to Affiliates. The Company shall deliver
to Parent, prior to the date the Registration Statement becomes effective under
the Securities Act, a letter (the "Affiliate Letter") identifying all persons
who are, at the time of Company Stockholders' Meeting, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act ("Rule 145"). The
Company shall use its best efforts to cause each person who is identified as an
"affiliate" in the Affiliate Letter to deliver, prior to the Effective Time, a
written agreement (an "Affiliate Agreement") in connection with restrictions on
affiliates under Rule 145 in substantially the form of Exhibit 5.5.
Section 5.6. Indemnification and Insurance.
(a) The certificate of incorporation of Parent shall contain the
provisions with respect to indemnification as currently in effect on the date
hereof, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who on or prior to the
Effective Time were directors or officers of Parent, unless such modification is
required by law.
(b) After the Effective Time, Parent shall, to the fullest extent
permitted under applicable law or under its certificate of incorporation as in
effect at the Effective Time, indemnify and hold harmless each present and
former director or officer of the Parent (collectively, the "Indemnified
Parties") against any costs or expenses (including attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, (x) arising out of or
pertaining to the transactions contemplated by this Agreement or (y) otherwise
with respect to any acts or omissions occurring at or prior to the Effective
Time, to the same extent as provided in its certificate of incorporation for a
period of six years after the Effective Time.
(c) For a period of six years after the Effective Time, Parent shall
maintain in effect, if available, directors' and officers' liability insurance
covering those persons who are currently covered by Parent's directors' and
officers' liability insurance policies (copies of which has been made available
to the Company) on terms comparable to those now applicable to said directors
and officers; provided, however, that in no event shall Parent be required to
expend in excess of 175% of the annual premium currently paid by Parent for such
coverage; and provided further, that if the premium for such coverage exceeds
such amount, Parent shall purchase a policy with the greatest coverage available
for such 175% of the annual premium.
(d) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Indemnified Parties, shall be binding
on all successors and assigns of Parent and shall be enforceable by the
Indemnified Parties.
Section 5.7. Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty contained in this
Agreement to become materially untrue or inaccurate, or (ii) any failure of the
Company, Parent or Merger Sub, as the case may be, materially to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and provided further that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of Sections 6.2(a) or 6.3(a) unless the failure to give such notice
results in material prejudice to the other party.
Section 5.8. Further Action/Tax Treatment. Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and otherwise to satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement. Each of Parent, Merger Sub and the Company shall use its best efforts
to cause the Merger to qualify, and will not (both before and after consummation
of the Merger) take any actions which could reasonably be expected to prevent
the Merger from qualifying, as a reorganization under the provisions of Section
368 of the Code.
Section 5.9. Public Announcements. Parent and the Company shall consult with
each other before issuing any press release with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement without the prior consent of the other party, which shall not be
unreasonably withheld;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may upon the
advice of outside counsel be required by law.
Section 5.10. Conveyance Taxes. Parent and the Company shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications,
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed at or before the Effective Time.
Section 5.11. Accountants' Letters. Upon reasonable notice from the other, the
Company and Parent shall use their respective best efforts to cause Ernst &
Young or PricewaterhouseCoopers, respectively, to deliver to Parent or the
Company, as the case may be, a letter, dated within two (2) business days of the
effective date of the Registration Statement covering such matters as are
requested by Parent or the Company, as the case may be, and as are customarily
addressed in accountant's "comfort" letters. In connection with Parent's efforts
to obtain such letter, if requested by PricewaterhouseCoopers, the Company shall
provide a representation letter to PricewaterhouseCoopers complying with the
statement on Auditing Standards No. 72 ("SAS 72"), if then required. In
connection with the Company's efforts to obtain such letter, if requested by
Ernst & Young, Parent shall provide a representation letter to Ernst & Young
complying with SAS 72, if then required.
Section 5.12. SEC Reports. Parent shall file all forms, reports and documents
required to be filed with the SEC after the date hereof and prior to the
Effective Time (collectively, the "Subsequent Reports"). The Subsequent Reports
shall (i) be prepared in all material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, the Parent Proxy
Statement shall not be included in the definition of a Subsequent Report for
purposes of this sentence.
Section 5.13. Parent Records. Prior to the Effective Time, Parent shall use
commercially reasonable efforts to collect at the principal office of Parent all
books and records of Parent and its subsidiaries, including originals of all
contracts to which Parent or any of its subsidiaries is a party.
Section 5.14. Financing Statements. Parent shall use commercially reasonable
efforts to have terminated all UCC-1 financing statements which name Parent as
debtor prior to the Effective Time.
ARTICLE VI. CONDITIONS TO THE MERGER
Section 6.1. Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statements shall have been initiated
or threatened by the SEC;
(b) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the Company in
accordance with the MBCL and the Parent Stockholder Actions shall have been
approved by the requisite vote of the stockholders of Parent in accordance with
the DGCL;
(c) No Injunctions or Restraints; Illegality. No statute, rule,
regulation, executive order, decree, ruling, temporary restraining order,
preliminary or permanent injunction or other order shall have been enacted,
entered, promulgated, enforced or issued by any court or governmental authority
of competent jurisdiction or shall otherwise be in effect which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
(d) Blue Sky Laws. All material permits and other authorizations
necessary under the Blue Sky Laws to issue shares of Parent Common Stock
pursuant to the Merger shall have been obtained;
(e) Final Net Available Cash. The Final Net Available Cash of Parent, as
calculated in accordance with Section 1.14, shall not be less than $8,000,000;
and
(f) Conversion of Preferred Stock. Each outstanding share of Company
Preferred Stock shall have been converted into shares of Company Common Stock
immediately prior to the Effective Time.
(g) Consent of Warrant Holders. Each holder of a Company Warrant shall
have consented to the form and substance of the warrants to be issued by Parent
for each Company Warrant assumed by Parent pursuant to Section 1.6(d).
Section 6.2. Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are also subject
to the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects at and as of the Effective Time as if made at and as of such
time, except for (i) changes contemplated by this Agreement, and (ii) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date), and Parent and
Merger Sub shall have received (x) a certificate to such effect signed by the
Chief Executive Officer and the Chief Financial Officer of the Company and (y) a
certificate of the Company's treasurer as to the number of shares of Company
Common Stock and Company Preferred Stock issued and outstanding as of the
Effective Time (or as of a date as close as reasonably practicable to the
Effective Time);
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Effective Time, and Parent and Merger Sub shall have received a certificate to
such effect signed by the Chief Executive Officer and the Chief Financial
Officer of the Company;
(c) Opinion of Counsel. Parent shall have received a legal opinion from
Ropes & Xxxx, legal counsel to the Company, in substantially the form attached
hereto as Exhibit 6.2(c);
(d) Tax Opinion. Parent shall have received a written opinion from Paul,
Hastings, Xxxxxxxx & Xxxxxx LLP, in form and substance reasonably satisfactory
to Parent, to the effect that the Merger will constitute a reorganization within
the meaning of Section 368 of the Code;
(e) Fairness Opinion. The fairness opinion referred to in Section 3.20
shall not have been withdrawn, amended or modified in any material respect;
(f) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by the
Company for the due authorization, execution and delivery of this Agreement and
the consummation by it of the transactions contemplated hereby shall have been
obtained and made by the Company, except where the failure to receive such
consents, waivers, approvals, authorizations or
orders could not reasonably be expected to (i) have a Company Material
Adverse Effect or (ii) delay or prevent the consummation of the Merger;
(g) Affiliate Agreements. Parent shall have received from each person
who is identified in the Affiliate Letters as an "affiliate" of the Company, an
Affiliate Agreement, and such Affiliate Agreement shall be in full force and
effect:
(h) Company Material Adverse Change. The Company shall not have suffered
a material adverse change in its assets, liabilities, prospects, financial
condition or operations (a "Company Material Adverse Change"); provided,
however, that it shall not be deemed a Company Material Adverse Change solely
and exclusively because: (i) the Company shall receive or learn of negative or
adverse clinical or other data in any clinical trials relating to the safety,
efficacy or other performance of PT-100 or any other drug, compound, technology,
process, or product of the Company ("Other Company Products"), (ii) negative or
adverse results in pre-clinical research and development activities involving
PT-100 or any of its analogues; (iii) there occurs a discovery, development,
commercialization or marketing of any drug, compound, technology, process or
product of any other person that competes with or could compete with PT-100 or
any Other Company Product; or (iv) a change in any facts or circumstances
relating to the United States economy generally or the biotechnology or
pharmaceutical industries.
(i) Dissenting Shares. Holders of no more than 5% of the aggregate
number of shares of Company Common Stock and Company Preferred Stock (on an
as-converted basis) outstanding immediately prior to the Closing Date shall have
complied with all requirements for perfecting stockholders' rights of appraisal
as set forth under the MBCL with respect to such shares.
Section 6.3. Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall be true and correct
in all material respects at and as of the Effective Time as if made at and as of
such time, except for (i) changes contemplated by this Agreement, and (ii) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date, and the Company
shall have received (x) a certificate to such effect signed by an executive
officer and the Chairman of the Board of Parent and (y) a certificate of the
Parent's transfer agent and an executive officer of Parent as to the number of
shares of Parent Common Stock and Parent Preferred Stock issued and outstanding
as of the Effective Time (or as of a date as close as reasonably practicable to
the Effective Time);
(b) Agreements and Covenants. Parent and Merger Sub shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by them at or prior to the
Effective Time, and the Company shall have received a certificate to such effect
signed by an executive officer and the Chairman of the Board of Parent;
(c) Opinion of Counsel. The Company shall have received a legal opinion
from Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, legal counsel to Parent, in
substantially the form attached hereto as Exhibit 6.3(c);
(d) Tax Opinion. The Company shall have received a written opinion of
Ropes & Xxxx, in form and substance reasonably satisfactory to the Company, to
the effect that the Merger will constitute a reorganization within the meaning
of Section 368 of the Code;
(e) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by
Parent and Merger Sub for the authorization, execution and delivery
of this Agreement and the consummation by them of the transactions contemplated
hereby shall have been obtained and made by Parent, except where the failure to
receive such consents, waivers, approvals, authorizations or orders could not
reasonably be expected to (i) have a Parent Material Adverse Effect, or (ii)
delay or prevent the consummation of the Merger;
(f) Certificate of Incorporation, By-laws. The Certificate of
Incorporation of Parent shall have been amended by the filing of an amendment
substantially similar to the form of the Certificate of Amendment attached
hereto as Exhibit 6.3(f) (provided, however, that the parties shall mutually
agree to the terms of the stock split with respect to the Parent Shares prior to
filing the Registration Statement pursuant to Section 5.1), and the Company
shall have received satisfactory evidence thereof; the by-laws of Parent shall
have been amended and restated in the form attached hereto as Exhibit 6.3(f),
and the Company shall have received satisfactory evidence thereof;
(g) Directors and Officers. Effective as of the Effective Time, the
current officers and directors of Parent shall have resigned, the persons named
on Exhibit 6.3(g) shall be elected as the directors of the Parent and the
persons named on Exhibit 6.3(g) shall have been appointed as the officers of
Parent, each to hold office until their respective successors are duly elected
or appointed and qualified; and
(h) Insurance. (i) The Parent Products Liability Policy shall be in full
force and effect; (ii) the Parent Directors and Officers Liability Policy shall
be in full force and effect; and (iii) Parent shall have obtained a six-year
extension of coverage under the Parent Directors and Officers Liability Policy
for acts occurring prior to the Effective Time on substantially the same terms
and conditions as under the current Parent Directors and Officers Liability
Policy and consistent with the premium limitations described in Section 5.6(d).
(i) Parent Material Adverse Change. Parent shall not have suffered a
material adverse change in its assets, liabilities or financial condition that
materially and adversely affects the ability of Parent to consummate the
transactions contemplated by this Agreement.
ARTICLE VII. TERMINATION
Section 7.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time, notwithstanding approval thereof by the stockholders of
the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated on or before the earlier of (i) 120 days after the filing of the
Parent Proxy Statement with the SEC or (ii) March 15, 2002 (the "Termination
Date") (provided that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure
of the Merger to occur on or before such date); provided, however, that the
Termination Date may be extended pursuant to Section 7.4;
(c) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued a nonappealable final order, decree or ruling or taken any other action
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger (provided that the right to terminate this Agreement under this
Section 7.1(c) shall not be available to any party who has not complied with its
obligations under Section 5.4 and such noncompliance materially contributed to
the issuance of any such order, decree or ruling or the taking of such action);
(d) by Parent (i) if any representation or warranty of the Company set
forth in this Agreement shall be untrue when made, or (ii) upon a breach of any
covenant or agreement on the part of the Company set forth in this
Agreement, such that the conditions set forth in Section 6.2(a) or 6.2(b) would
not be satisfied (either (i) or (ii) above being a "Company Terminating
Breach"), provided, however, that if such Company Terminating Breach is curable
by the Company through the exercise of its best efforts and for as long as the
Company continues to exercise such best efforts, Parent may not terminate this
Agreement under this Section 7.1(d);
(e) by the Company, (i) if any representation or warranty of Parent or
Merger Sub set forth in this Agreement shall be untrue when made, or (ii) upon a
breach of any covenant or agreement on the part of Parent or Merger Sub set
forth in this Agreement, such that the conditions set forth in Section 6.3(a) or
6.3(b) would not be satisfied (either (i) or (ii) above being a "Parent
Terminating Breach"), provided, however, that if such Parent Terminating Breach
is curable by Parent through the exercise of its best efforts and for as long as
Parent continues to exercise such best efforts, the Company may not terminate
this Agreement under this Section 7.1(e);
(f) by Parent if the Board of Directors of Parent shall have authorized
Parent, subject to complying with the terms of this Agreement, to enter into a
definitive agreement with respect to a Superior Parent Proposal and Parent shall
have notified the Company in writing that it intends to enter into such an
agreement (which notification shall include a summary of the material terms of
such Superior Parent Proposal); provided, however, that such termination
pursuant to this Section 7.1(g) shall not be effective unless and until Parent
shall have paid to the Company the fee described in Section 7.5(c) hereof and
shall have complied with Section 4.4 hereof;
(g) by the Company in the event that the Parent Stockholder Actions
shall fail to receive the requisite vote for approval at the Parent
Stockholders' Meeting or any adjournments or postponements thereof; or
(h) by Parent in the event that the Merger and other transactions
contemplated by this Agreement shall fail to receive the requisite vote for
approval at the Company Stockholders' Meeting or any adjournments or
postponements thereof.
Section 7.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto or any of its
affiliates, directors, officers or stockholders except (i) as set forth in
Sections 7.3 and 7.5 hereof, and (ii) nothing herein shall relieve any party
from liability for any breach hereof occurring prior to termination. The
Confidentiality Agreement shall survive termination of this Agreement as set
forth therein.
Section 7.3. Fees and Expenses. Except as set forth in this Section 7.3 and
Section 7.5, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated.
Section 7.4. Parent's Right to Participate in Future Equity Financing. At any
time during the period beginning ten (10) days before the Termination Date and
ending on the Termination Date, Parent may, at its sole option, elect to extend
the Termination Date for purposes of Section 7.1(b) of this Agreement for an
additional fourteen (14) days (the "Extension Option") by notifying the Company
in writing and paying the Company a fee of $250,000 (the "Extension Fee"),
subject to the following conditions: (i) this Agreement is in full force and
effect on the date upon which Parent exercises the Extension Option; (ii) Parent
is exercising the Extension Option solely for purposes of attempting to obtain
the approval of the Parent Stockholder Actions; (iii) Parent is not in breach of
this Agreement on the date upon which Parent exercises the Extension Option;
(iv) neither the Company nor Parent has given notice of termination pursuant to
any provision of Section 7.1; (v) the Extension Fee shall have been paid by
Parent and received by the Company on or before the Termination Date by wire
transfer of immediately available funds. In the event that Parent exercises the
Extension Option in accordance with the terms of the prior sentence, the
Termination Date for purposes of Section 7.1(b) of this Agreement shall be
changed to the date that is fourteen (14) days after the then-current
Termination Date. The Extension Option may be exercised no more than once.
Exercise of the Extension Option shall not constitute a waiver or cure of any
breach by Parent of any representation, warranty or agreement herein. In the
event that (A) Parent does not exercise the Extension Option and (B) the
Company elects in its sole discretion to terminate this Agreement pursuant to
Section 7.1(b), Parent shall have the right to participate in any equity
financing engaged in by the Company that is expected by the Company to close (or
become the subject of a written term sheet or binding agreement) on or before
the date that is sixty (60) days after the Termination Date (a "Company
Financing"). Within twenty (20) days of the anticipated closing date of a
Company Financing, the Company shall provide Parent with written notice of its
intent to close the Company Financing, at which time Parent will have (10) days
to notify the Company in writing of its intent to participate in the Company
Financing. Parent shall have the right to purchase at the closing of the Company
Financing up to the number of shares equal to the aggregate number of shares
being purchased by the other investors participating in such financing. Such
right to participate will be at the same price and on the same terms and
conditions offered to the other investors participating in the Company
Financing. Notwithstanding the foregoing, the Company may at any time and in its
sole discretion terminate a Company Financing. Notwithstanding anything in this
Section 7.4 to the contrary, Parent shall not have the right to participate in
any Company Financing in the event that a vote of the stockholders of Parent is
taken and such stockholders fail to approve the Parent Stockholder Actions.
Section 7.5. Expense Payments Upon Termination.
(a) Upon execution of this Agreement, Parent shall pay to the Company
$500,000 (the "Company Lock-Up Fee").
(b) Parent shall forfeit to the Company the Company Lock-Up Fee, and the
Company shall have no obligation to repay such amount to Parent, in the event
that: (i) this Agreement is terminated by the Company or Parent pursuant to
Section 7.1(b) other than by reason of a failure of the Company to fulfill any
of its obligations under this Agreement such that any such failure causes or
results in the failure of the Merger to occur on or before the Termination Date,
(ii) this Agreement is terminated by the Company or Parent pursuant to Section
7.1(c) in the event that the party that initiated the action or proceeding to
restrain, enjoin or otherwise prohibit the Merger is a stockholder of Parent,
(iii) this Agreement is terminated by the Company pursuant to Section 7.1(e), or
(iv) this Agreement is terminated by the Company pursuant to Section 7.1(g).
(c) Parent shall forfeit to the Company $250,000 of the Company Lock-Up
Fee (the "Alternative Fee") in the event that this Agreement is terminated by
the Company or Parent pursuant to Section 7.1(c) for any reason other than the
reasons expressly described in Section 7.5(b)(ii) or 7.5(e)(ii). In such event,
the Company shall pay Parent $250,000 (representing a return of the remaining
Company Lock-Up Fee) by wire transfer of immediately available funds within two
business days after the event described above.
(d) Parent shall forfeit to the Company the Company Lock-Up Fee and
shall pay to the Company an additional $650,000 fee (the "Break-Up Fee") in the
event that this Agreement is terminated by Parent pursuant to Section 7.1(f).
Parent shall pay the Break-Up Fee to the Company by wire transfer of immediately
available funds immediately upon the termination of this Agreement. In the event
that Parent has paid the Extension Fee pursuant to Section 7.4, an additional
amount of $250,000 shall be credited against the payment of the Break-Up Fee.
(e) The Company shall pay Parent $1,000,000 (representing a return of
the Company Lock-Up Fee and an additional $500,000 fee) (in aggregate, the
"Parent Fee") in the event that: (i) this Agreement is terminated by the Company
or Parent pursuant to Section 7.1(b) by reason of a failure of the Company to
fulfill any of its obligations under this Agreement such that any such failure
causes or results in the failure of the Merger to occur on or before the
Termination Date, (ii) this Agreement is terminated by the Company or Parent
pursuant to Section 7.1(c) provided that the party that initiated the action or
proceeding to restrain, enjoin or otherwise prohibit the Merger is a stockholder
of the Company, (iii) this Agreement is terminated by Parent pursuant to Section
7.1(d); or (iv) this Agreement is terminated by Parent pursuant to Section
7.1(h) by reason of the Company's failure to receive the requisite vote for
approval at the Company Stockholders' Meeting. The Company shall pay the Parent
Fee to Parent by wire transfer of immediately available funds within two
business days after the events described in clauses.
(f) Each Party's sole and exclusive remedy with respect to a Company
Terminating Breach or a Parent Terminating Breach, as the case may be, shall be
pursuant to the termination provisions set forth in Section 7.1 and the
provisions for fees payable to such Party set forth in this Section 7.5. Each
Party acknowledges and agrees that (i) the damages caused by such a breach are
uncertain in amount and would be difficult to prove, (ii) that the amount of the
fees set forth in this Section 7.1 are reasonable estimates of such damages in
the light of the anticipated or actual loss caused by such a breach and (iii)
the fees payable under this Section 7.5 shall be deemed to be payments of
liquidated damages.
ARTICLE VIII. GENERAL PROVISIONS
Section 8.1. Effectiveness of Representations, Warranties and Agreements, Etc.
Except as otherwise provided in this Section 8.1, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.1, as the case may be, except that the agreements set
forth in Article I and Section 5.7, the second sentence of Section 5.8, 7.4 and
7.5 shall survive the Effective Time indefinitely and those set forth in Section
7.3 shall survive such termination indefinitely.
Section 8.2. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
of receipt, to the facsimile numbers specified below (or at such other address
or facsimile number for a party as shall be specified by like notice):
If to Parent or Merger Sub:
HMSR Inc.
000 Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attention: Chairman of the Board
With a copy to:
Xxxx X. Xxxxxx, III, Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
If to the Company:
Point Therapeutics, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxxx Xxxxxxx, President and CEO
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Section 8.3. Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliates" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person.
(b) "beneficial owner" with respect to any shares of Company Common
Stock means a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 of the Exchange Act) beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or associates
has, directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding, or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
shares.
(c) "business day" means any day other than a day on which banks in
The Commonwealth of Massachusetts are required or authorized to be closed.
(d) "Company Material Adverse Effect" means any change or effect,
individually or in the aggregate, that is or may be reasonably expected (i) to
be materially adverse to the assets (including intangibles), liabilities,
obligations, business, financial condition, operations, or results of operations
of the Company or (ii) to materially and adversely affect the ability of the
Company to consummate the transactions contemplated by this Agreement or
materially impair or delay the Company's ability to perform its obligations
hereunder.
(e) "Company Preferred Stock" means, collectively, the Company's
Series A Convertible Preferred Stock, no par value, and the Company's Series B
Convertible Preferred Stock, no par value.
(f) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise.
(g) "knowledge" means actual knowledge after reasonable investigation
by the individual officers and employees who would reasonably be expected to
have knowledge of the matter in question. An individual will be deemed to have
"knowledge" of a particular fact or matter if: (a) such individual is actually
aware of such fact or
matter; or (b) a prudent individual could be expected to discover or otherwise
become aware of such fact or matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or matter.
(h) "liens" means all security interests, liens, claims, pledges,
agreements, limitations in voting rights, charges or other encumbrances of any
nature whatsoever.
(i) "GAAP" means United States generally accepted accounting
principles.
(j) "Net Available Cash" means, as of a specific date, determined in
accordance with generally accepted accounting principles (other than exclusions
for immateriality) applied on a basis consistent with prior periods, the amount
equal to (1) the aggregate amount of cash, cash equivalents, marketable
securities and short term investments minus (2) the aggregate amount of all
liabilities.
(k) "Number of Shares of Company Common Stock Outstanding on a Fully
Diluted Basis" means, with respect to a specific date, the number equal to the
sum of (i) the number of shares of Company Common Stock then outstanding, (ii)
the number of shares of Company Common Stock into which the shares of Company
Preferred Stock then outstanding are then convertible (assuming, for this
purpose, that all shares of Company Preferred Stock then outstanding were fully
convertible at such time), and (iii) the number of shares of Company Common
Stock into which the Stock Options then outstanding and the Company Warrants
then outstanding are then exercisable (assuming, for this purpose, that all
Stock Options and Company Warrants then outstanding were fully exercisable at
such time).
(l) "Number of Shares of Parent Common Stock Outstanding on a Fully
Diluted Basis" means, with respect to a specific date, the number equal to the
sum of (i) the number of shares of Parent Common Stock then outstanding, (ii)
the number of shares of Parent Common Stock into which the shares of Parent
Preferred Stock then outstanding are then convertible (assuming, for this
purpose, that all shares of Parent Preferred Stock then outstanding were fully
convertible at such time), and (iii) the number of shares of Parent Common Stock
into which the options to purchase Parent Common Stock then outstanding and
warrants to purchase Parent Common Stock then outstanding are then exercisable
(assuming, for this purpose, that all such options and warrants then outstanding
were fully exercisable at such time).
(m) "PT-100" shall mean the compound ValboroPro (C9H19BN2O3) referred
to as "PT-100" by the Company.
(n) "Parent Directors and Officers Liability Policy" means the
Directors and Officers Liability Insurance Policy issued to Parent by Genesis
Insurance Company for the policy period April 7, 2001, to April 7, 2002.
(o) "Parent Material Adverse Effect" means any change or effect,
individually or in the aggregate, that is or may be reasonably expected (i) to
be materially adverse to the assets (including intangibles), liabilities,
obligations, business, financial condition, operations, or results of operations
of Parent or its subsidiaries, taken as a whole or (ii) to materially or
adversely affect the ability of Parent to consummate the transactions
contemplated by this Agreement or materially impair or delay Parent's ability to
perform its obligations hereunder.
(p) "Parent Products Liability Policy" means the Products Liability
Policy issued to Parent by Columbia Casualty Company for the policy period
September 21, 2000, to September 21, 2006.
(q) "Parent Stockholder Actions" means actions of Parent to: (i)
amend the certificate of incorporation of Parent to authorize the issuance of
additional shares of Parent Common Stock, to effect a reverse split with respect
to Parent Common Stock and change the corporate name of Parent; and (ii) amend
Parent's 1994 Stock Option Plan to increase the number of shares issuable
thereunder.
(r) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act).
(s) "Preferred Stock Conversion Agreement" means the Preferred Stock
Conversion Agreement, dated as of the date hereof, by and among the Company and
the holders of Company Preferred Stock named therein, a copy of which is
attached hereto as Exhibit 8.3(s).
(t) "subsidiary" or "subsidiaries" of the Company, Parent or any
other person means any corporation, partnership, joint venture or other legal
entity of which the Company, the Surviving Corporation, Parent or such other
person, as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
Section 8.4. Amendment. This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after approval of the
Merger by the stockholders of the Company, no amendment may be made which by law
requires further approval by such stockholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
Section 8.5. Waiver. At any time prior to the Effective Time, any party hereto
may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party or parties to be bound
thereby.
Section 8.6. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.7. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
Section 8.8. Entire Agreement. This Agreement constitute the entire agreement
and supersede all prior agreements and undertakings (other than the
Confidentiality Agreement), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof.
Section 8.9. Assignment. This Agreement shall not be assigned by operation of
law or otherwise.
Section 8.10. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation, other than
Section 5.7 (which is intended to be for the benefit of the Indemnified Parties
and may be enforced by such Indemnified Parties).
Section 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 8.12. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York applicable to
contracts executed and fully performed within the State of New York.
Section 8.13. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 8.14. Consent to Jurisdiction. Each of the parties hereto:
(a) consents to submit itself to the personal jurisdiction of the United
States District Court for the Southern District of New York in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement to the extent such court would have subject matter jurisdiction
with respect to such dispute;
(b) agrees that it will not attempt to deny or defeat such personal
jurisdiction or venue by motion or other request for leave from any such court;
(c) agrees that it will not bring any action relating to this Agreement
or any of the transactions contemplated by this Agreement in any Court other
than such courts;
(d) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to a party at its address
set forth in Section 8.2 or at such other address of which a party shall have
been notified pursuant thereto; and
(e) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law.
[This space intentionally left blank.]
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
HMSR INC. POINT THERAPEUTICS, INC.
By: /s/ Xxxx X. XxXxxxx, III By: /s/ Xxxxxx X. Xxxxxxx, Xx.
------------------------------- -----------------------------
Name: Xxxx X. XxXxxxx, III Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Officer Title: President
By: /s/ Xxxxxxx Xxxxx
-----------------------------
Name: Xxxxxxx Xxxxx
Title: Treasurer
PT ACQUISITION CORP.
By: Xxxx X. XxXxxxx, III
--------------------------------
Name: Xxxx X. XxXxxxx, III
Title: President
