EXHIBIT (d)(1)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered
into as of December 3, 2002, by and among: GILEAD SCIENCES, INC., a Delaware
corporation ("Parent"); SIMBOLO ACQUISITION SUB, INC., a Delaware corporation
and a wholly owned subsidiary of Parent ("Acquisition Sub"); and TRIANGLE
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"). Certain
capitalized terms used in this Agreement are defined in Annex I.
RECITALS
A. The boards of directors of Parent, Acquisition Sub and the Company
have determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth in this Agreement.
B. In furtherance of the acquisition of the Company by Parent, it is
proposed: (i) that Acquisition Sub make a cash tender offer for any and all of
the outstanding shares of Company Common Stock at a price of $6.00 per share
(such dollar amount, or any greater dollar amount per share paid pursuant to the
Offer, subject to adjustment pursuant to Section 1.1(e), being referred to in
this Agreement as the "Offer Price"), net to the seller in cash, upon the terms
and subject to the conditions set forth in this Agreement (such cash tender
offer, as it may be amended from time to time, being referred to in this
Agreement as the "Offer"); and (ii) that, after acquiring shares of Company
Common Stock pursuant to the Offer, Acquisition Sub merge with and into the
Company upon the terms and subject to the conditions set forth in this Agreement
(the merger of Acquisition Sub into the Company being referred to in this
Agreement as the "Merger").
C. The board of directors of the Company has: (i) determined that this
Agreement and the transactions contemplated by this Agreement, including the
Offer and the Merger, are in the best interests of the Company's stockholders;
and (ii) resolved to recommend that the stockholders of the Company accept the
Offer, tender their shares pursuant to the Offer and (if required by applicable
law) adopt this Agreement.
D. In order to induce Parent and Acquisition Sub to enter into this
Agreement and to consummate the transactions contemplated by this Agreement,
concurrently with the execution and delivery of this Agreement, certain
stockholders of the Company are executing Stockholder Agreements in favor of
Parent and Acquisition Sub (the "Stockholder Agreements").
E. In order to induce the Company to enter into this Agreement, Parent
is agreeing to loan to the Company the sum of $50,000,000 and, in connection
therewith, the Company and Parent will execute and deliver a Convertible
Promissory Note in the form attached as Exhibit A (the "Promissory Note") and an
Investor Rights Agreement in the form attached as Exhibit B (the "Investor
Rights Agreement," and, together with the Promissory Note, the "Financing
Documents").
1.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. THE OFFER
1.1 CONDUCT OF THE OFFER.
(a) Provided that each of the conditions set forth in clauses "(b),"
"(c)," "(e)" and "(f)" of Annex II are satisfied as of the commencement of the
Offer, Parent shall cause Acquisition Sub to commence (within the meaning of
Rule 14d-2 under the Exchange Act) the Offer as promptly as practicable after
the date of this Agreement, and in any event (provided that the Company has
fulfilled its obligation to provide information to Parent and Acquisition Sub on
a timely basis as contemplated by Section 1.1(d)) Parent shall use reasonable
efforts to cause Acquisition Sub to commence the Offer within ten business days
after the date of this Agreement.
(b) The obligation of Acquisition Sub to accept for payment and to pay
for any shares of Company Common Stock validly tendered pursuant to the Offer
shall be subject to (i) the condition that there shall be validly tendered (and
not withdrawn) a number of shares of Company Common Stock that, together with
any shares of Company Common Stock owned by Parent or any wholly-owned
Subsidiary of Parent immediately prior to the acceptance for payment of shares
of Company Common Stock pursuant to the Offer, represents more than fifty (50)
percent of the Adjusted Outstanding Share Number (the "Minimum Condition") and
(ii) the other conditions set forth in Annex II. (The Minimum Condition and the
other conditions set forth in Annex II are referred to collectively in this
Agreement as the "Offer Conditions.") Acquisition Sub expressly reserves the
right, in its sole discretion, to increase the Offer Price and to waive or make
any other changes to the terms and conditions of the Offer; PROVIDED, HOWEVER,
that without the prior written consent of the Company: (i) the Minimum Condition
may not be amended or waived; and (ii) no change may be made to the Offer that
(A) changes the form of consideration to be paid pursuant to the Offer, (B)
decreases the Offer Price or the number of shares of Company Common Stock sought
to be purchased in the Offer, (C) imposes conditions to the Offer in addition to
the Offer Conditions, (D) except as provided in Section 1.1(c), extends the
expiration date of the Offer beyond the initial expiration date of the Offer or
(E) amends any other term of the Offer in a manner adverse to the holders of
Company Common Stock. Subject to the terms and conditions of the Offer and this
Agreement, Parent shall cause Acquisition Sub to, and Acquisition Sub shall,
accept for payment all shares of Company Common Stock validly tendered pursuant
to the Offer (and not withdrawn) as soon as practicable after Acquisition Sub is
permitted to do so under applicable Legal Requirements, and Parent shall cause
Acquisition Sub to pay for such shares promptly thereafter, and in any event in
compliance with Rule 14e-1(c) under the Exchange Act. Parent shall provide, or
cause to be provided to Acquisition Sub, on a timely basis, the funds necessary
to pay for any shares of Company Common Stock that Acquisition Sub accepts or is
obligated to accept for payment pursuant to the Offer.
(c) The Offer shall initially be scheduled to expire 20 business days
following the date of the commencement thereof. Notwithstanding anything to the
contrary contained in this Agreement, but subject to the parties' respective
termination rights under
2.
Section 8.1: (i) if, on any date as of which the Offer is scheduled to expire,
any Offer Condition has not been satisfied or waived, Acquisition Sub may, in
its discretion (and without the consent of the Company or any other Person),
extend the Offer from time to time for such period of time as Acquisition Sub
reasonably determines to be necessary to permit such Offer Condition to be
satisfied; (ii) if, on any date as of which the Offer is scheduled to expire,
any Offer Condition has not been satisfied or waived, Acquisition Sub shall, if
the Company so requests in writing prior to the then-scheduled expiration date
of the Offer, extend the Offer from time to time for such period of time (but in
each case not more than 15 business days) as the Company reasonably requests;
(iii) Acquisition Sub may, in its discretion (and without the consent of the
Company or any other Person), extend the Offer from time to time for any period
of time required by any rule or regulation of the SEC applicable to the Offer;
(iv) if, on any date as of which the Offer is scheduled to expire, the Minimum
Condition has been satisfied but the sum of the number of shares of Company
Common Stock that have been validly tendered pursuant to the Offer (and not
withdrawn) plus the number of shares of Company Common Stock owned by Parent or
any wholly-owned Subsidiary of Parent is less than 90% of the number of shares
of Company Common Stock outstanding, then Acquisition Sub may, in its discretion
(and without the consent of the Company or any other Person), extend the offer
for an additional period of not more than ten business days; and (v) Acquisition
Sub may, in its discretion (and without the consent of the Company or any other
Person), elect to provide for a subsequent offering period (and one or more
extensions thereof) in accordance with Rule 14d-11 under the Exchange Act and in
compliance with all other provisions of applicable securities laws.
(d) On the date of commencement of the Offer, Parent and Acquisition
Sub shall (i) file with the SEC a Tender Offer Statement on Schedule TO with
respect to the Offer, which will contain or incorporate by reference the offer
to purchase shares of Company Common Stock pursuant to the Offer (the "Offer to
Purchase") and the forms of related letter of transmittal and summary
advertisement and (ii) cause the Offer to Purchase and related documents to be
disseminated to holders of shares of Company Common Stock in accordance with all
applicable Legal Requirements. (Said Tender Offer Statement on Schedule TO and
all exhibits, amendments and supplements thereto are referred to collectively in
this Agreement as the "Offer Documents.") Parent and Acquisition Sub shall use
reasonable efforts to cause the Offer Documents to comply in all material
respects with the Exchange Act and the rules and regulations thereunder. Each of
Parent, Acquisition Sub and the Company shall use reasonable efforts to respond
promptly to any comments of the SEC or its staff with respect to the Offer
Documents or the Offer, to correct promptly any information provided by it for
use in the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect, and to take all steps
necessary to cause the Offer Documents, as supplemented or amended to correct
such information, to be filed with the SEC and to be disseminated to holders of
shares of Company Common Stock to the extent required by applicable federal
securities laws. The Company shall promptly furnish to Parent and Acquisition
Sub all information concerning the Acquired Corporations and the Company's
stockholders that may be required or reasonably requested in connection with any
action contemplated by this Section 1.1(d). The Company and its counsel shall be
given reasonable opportunity to review and comment on the Offer Documents prior
to the filing thereof with the SEC. Parent and Acquisition Sub shall provide the
Company and its counsel with any comments Parent, Acquisition Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments.
3.
(e) If, between the date of this Agreement and the date on which any
particular share of Company Common Stock is accepted for payment and paid for
pursuant to the Offer, the outstanding shares of Company Common Stock are
changed into a different number or class of shares by reason of any stock split,
division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction, then the Offer Price applicable to such share shall be
appropriately adjusted.
1.2 COMPANY ACTIONS.
(a) The Company hereby consents to the Offer and represents that its
board of directors, at a meeting duly called and held, has (i) determined that
this Agreement and the transactions contemplated by this Agreement, including
the Offer and the Merger, are in the best interests of the Company's
stockholders, (ii) approved this Agreement and the transactions contemplated by
this Agreement, including the Offer and the Merger, in accordance with the
requirements of the Delaware General Corporation Law (the "DGCL"), (iii)
declared that this Agreement is advisable, (iv) resolved to recommend that
stockholders of the Company accept the Offer, tender their shares of Company
Common Stock pursuant to the Offer and (if required by applicable law) adopt
this Agreement (the recommendation of the Company's board of directors that the
stockholders of the Company accept the Offer, tender their shares of Company
Common Stock pursuant to the Offer and (if required by applicable law) adopt
this Agreement being referred to as the "Company Board Recommendation"), and (v)
to the extent necessary, adopted a resolution for the purpose of causing the
Company not to be subject to any restriction set forth in any state takeover law
or similar Legal Requirement that might otherwise apply to the Offer, the
Merger, any of the Stockholder Agreements, any of the Financing Documents or any
of the other transactions contemplated by this Agreement, any of the Stockholder
Agreements or any of the Financing Documents. Subject to Section 1.2(b): (A) the
Company consents to the inclusion of the Company Board Recommendation in the
Offer Documents in a form and manner reasonably determined by the Company to be
acceptable; and (B) the Company Board Recommendation shall not be withdrawn or
modified in a manner adverse to Parent or Acquisition Sub, and no resolution by
the board of directors of the Company or any committee thereof to withdraw or
modify the Company Board Recommendation in a manner adverse to Parent or
Acquisition Sub shall be adopted.
(b) Notwithstanding anything to the contrary contained in Section
1.2(a), at any time prior to the Acceptance Date, the Company Board
Recommendation may be withdrawn or modified in a manner adverse to Parent and
Acquisition Sub if: (i) an unsolicited, bona fide written offer by a third party
unaffiliated with the Company to acquire or otherwise enter into a transaction
which would result in such third party becoming the holder of at least a
majority of the outstanding shares of Company Common Stock is made to the
Company and is not withdrawn; (ii) the Company provides Parent with at least two
business days' prior notice of any meeting of the Company's board of directors
or any committee thereof at which such board of directors or such committee will
determine whether such offer is a Superior Offer; (iii) the Company's board of
directors determines in good faith (after taking into account the advice of Banc
of America Securities LLC or another independent financial advisor of nationally
recognized reputation) that such offer constitutes a Superior Offer; (iv) the
Company's board of directors determines in good faith, after having taken into
account the advice of the Company's outside legal counsel, that, in light of
such Superior Offer, the failure to withdraw or modify such
4.
Company Board Recommendation in a manner adverse to Parent or Acquisition Sub
would be inconsistent with the fiduciary obligations of the Company's board of
directors to the Company's stockholders under applicable Legal Requirements; and
(v) such Superior Offer shall not have resulted directly or indirectly from any
breach of Section 5.3 or from any action taken by the Company or any of its
Representatives with the intent of circumventing any of the provisions set forth
in Section 5.3.
(c) On the date of commencement of the Offer, the Company shall file
with the SEC and (following or contemporaneously with the dissemination of the
Offer to Purchase and related documents) disseminate to holders of shares of
Company Common Stock a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "Schedule 14D-9")
that, subject only to Section 1.2(b), shall reflect the Company Board
Recommendation. Each of Parent and Acquisition Sub shall promptly furnish to the
Company all information concerning Parent and Acquisition Sub that is required
or reasonably requested by the Company in connection with any action
contemplated by this Section 1.2(c). The Company shall use reasonable efforts to
cause the Schedule 14D-9 to comply in all material respects with the Exchange
Act and the rules and regulations thereunder and other applicable Legal
Requirements. Each of Parent, Acquisition Sub and the Company agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9, as supplemented or amended to correct such
information, to be filed with the SEC and to be disseminated to holders of
shares of Company Common Stock to the extent required by applicable federal
securities laws. The Company shall give Parent and its counsel reasonable
opportunity to review and comment on the Schedule 14D-9 (including any amendment
thereto) prior to the filing thereof with the SEC. The Company shall provide
Parent and its counsel with any comments the Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9 promptly after
receipt of such comments.
(d) The Company shall, or shall cause its transfer agent to, (i)
promptly furnish Parent with an accurate and complete list of its stockholders
as of the most recent practicable date, mailing labels and an accurate and
complete copy of the most recent available listing or computer file containing
the names and addresses of all record holders of shares of Company Common Stock
and lists of securities positions of shares of Company Common Stock held in
stock depositories, and (ii) provide to Parent such additional information
(including updated lists of stockholders, mailing labels and lists of securities
positions) and such other assistance as Parent may reasonably request in order
to disseminate and otherwise communicate the Offer and the Merger to the holders
of shares of Company Common Stock. Except as required by applicable Legal
Requirements or legal process, and except as necessary to disseminate the Offer
Documents, Parent and Acquisition Sub shall hold in confidence the information
contained in any such listings and files to the extent required by the
Confidentiality Agreement, dated as of November 1, 2002, between Parent and the
Company (the "Confidentiality Agreement") and shall use and return such
information in the manner set forth in the Confidentiality Agreement.
5.
1.3 DIRECTORS.
(a) Effective as of the Acceptance Date, Parent shall be entitled to
designate to serve on the Company's board of directors (the "Post-Acceptance
Board") the number of directors, rounded up to the next whole number, equal to
the product of: (i) the total number of directors on the Company's board of
directors (giving effect to the election of any additional directors pursuant to
this Section); and (ii) a fraction having a numerator equal to the aggregate
number of shares of Company Common Stock then beneficially owned by Parent or
Acquisition Sub (including all shares of Company Common Stock accepted for
payment pursuant to the Offer) and having a denominator equal to the total
number of shares of Company Common Stock then outstanding. At Parent's request
on or after the Acceptance Date, the Company shall use its reasonable best
efforts to take all actions (including, to the extent necessary, obtaining
resignations of incumbent directors and increasing the number of authorized
directors) necessary to cause Parent's designees to be elected or appointed to
the Company's board of directors. In connection with the designation by Parent
of individuals to serve on the Company's board of directors, the Company shall
(to the extent requested by Parent) use its reasonable best efforts to cause
individuals designated by Parent to constitute the number of members, rounded up
to the next whole number, on (A) each committee of the Company's board of
directors and (B) the board of directors of each Subsidiary of the Company (and
each committee thereof) that represents at least the same percentage as
individuals designated by Parent represent on the Company's board of directors.
Notwithstanding the provisions of this Section 1.3, the Company shall use its
reasonable best efforts to ensure that, at all times prior to the Effective Time
(as defined in Section 2.3), at least two of the members of the Company's board
of directors are individuals who were directors of the Company on the date of
this Agreement (the "Continuing Directors"); PROVIDED, HOWEVER, that (1) if at
any time prior to the Effective Time there shall be only one Continuing Director
serving as a director of the Company for any reason, then the Company's board of
directors shall cause an individual selected by the remaining Continuing
Director to be designated to serve on the Company's board of directors (and such
individual shall be deemed to be a Continuing Director for all purposes under
this Agreement), and (2) if at any time prior to the Effective Time no
Continuing Directors then remain, then the Company's board of directors shall
designate two individuals to serve on the Company's board of directors who are
not officers, employees or affiliates of the Company, Parent or Acquisition Sub
(and such individuals shall be deemed to be Continuing Directors for all
purposes under this Agreement).
(b) The Company's obligation to appoint Parent's designees to the
Company's board of directors shall be subject to Section 14(f) of the Exchange
Act and Rule 14f-1 thereunder. The Company shall promptly take all actions, and
shall include in the Schedule 14D-9 such information with respect to the Company
and its officers and directors, as Section 14(f) of the Exchange Act and Rule
14f-1 thereunder require in order to fulfill its obligations under this Section
1.3, so long as Parent shall have provided to the Company on a timely basis the
information and consents with respect to Parent and its nominees, officers,
directors and affiliates required by Section 14(f) of the Exchange Act and Rule
14f-1 thereunder. The provisions of this Section 1.3 are in addition to, and
shall not limit, any right that Acquisition Sub, Parent or any affiliate of
Acquisition Sub or Parent may have (with respect to the election of directors or
otherwise) under applicable Legal Requirements as a holder or beneficial owner
of shares of Company Common Stock.
6.
(c) Following the election or appointment of Parent's designees
pursuant to Section 1.3(a) and until the Effective Time, the approval of a
majority of the Continuing Directors shall be required to authorize any Adverse
Action (as defined below). For purposes of this Section 1.3(c), "Adverse Action"
shall mean any of the following actions of the Company, to the extent the action
in question could reasonably be expected to affect adversely the holders of
shares of Company Common Stock (other than Parent or Acquisition Sub): (i) any
action by the Company with respect to any amendment or waiver of any term or
condition of this Agreement, the Merger, the Financing Documents or the
certificate of incorporation or bylaws of the Company; (ii) any termination or
rescission of this Agreement, the Merger or the Financing Documents by the
Company; (iii) any extension by the Company of the time for the performance of
any of the obligations or other acts of Parent or Acquisition Sub, or any waiver
or assertion of any of the Company's rights under this Agreement or the
Financing Documents; or (iv) any other consent or action by the Company's board
of directors with respect to this Agreement, the Merger or the Financing
Documents. The approval by a majority of the Continuing Directors of any Adverse
Action shall constitute the valid authorization of the Company's board of
directors with respect to such Adverse Action, and no other action on the part
of the Company or by any other director of the Company shall be required to
authorize such Adverse Action.
1.4 TOP-UP OPTION.
(a) The Company hereby grants to Parent and Acquisition Sub an
irrevocable option (the "Top-Up Option") to purchase, at a price per share equal
to the Offer Price, a number of shares of Company Common Stock (the "Top-Up
Option Shares") that, when added to the number of shares of Company Common Stock
owned by Parent or any wholly-owned Subsidiary of Parent at the time of exercise
of the Top-Up Option, constitutes one share of Company Common Stock more than
90% of the number of shares of Company Common Stock that will be outstanding
immediately after the issuance of the Top-Up Option Shares. The Top-Up Option
may be exercised by Parent or Acquisition Sub, in whole but not in part, at any
time on or after the Acceptance Date and on or prior to the tenth business day
after the later of (i) the Acceptance Date or (ii) the expiration of any
subsequent offering period; PROVIDED, HOWEVER, that the obligation of the
Company to deliver Top-Up Option Shares upon the exercise of the Top-Up Option
is subject to the condition that no provision of any applicable law and no
judgment, injunction, order or decree shall prohibit the exercise of the Top-Up
Option or the delivery of the Top-Up Option Shares in respect of such exercise.
The parties shall cooperate to ensure that the issuance of the Top-Up Option
Shares is accomplished consistent with all applicable Legal Requirements,
including compliance with an applicable exemption from registration of the
Top-Up Option Shares under the Securities Act.
(b) In the event Parent or Acquisition Sub wishes to exercise the
Top-Up Option, Parent shall so notify the Company and shall set forth in such
notice (i) the number of shares of Company Common Stock that are expected to be
owned by Parent or any wholly-owned Subsidiary of Parent immediately preceding
the purchase of the Top-Up Option Shares and (ii) a place and time for the
closing of the purchase of the Top-Up Option Shares. The Company shall, as soon
as practicable following receipt of such notice, notify Parent of the number of
shares of Company Common Stock then outstanding and the number of Top-Up Option
Shares. At the closing of the purchase of the Top-Up Option Shares, Parent or
Acquisition Sub, as the case may be, shall pay the Company the aggregate price
required to be
7.
paid for the Top-Up Option Shares, and the Company shall cause to be issued to
Parent or Acquisition Sub a certificate representing the Top-Up Option Shares.
SECTION 2. MERGER TRANSACTION
2.1 MERGER OF ACQUISITION SUB INTO THE COMPANY. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time,
Acquisition Sub shall be merged with and into the Company, and the separate
existence of Acquisition Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
2.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth
in this Agreement and in the applicable provisions of the DGCL.
2.3 CLOSING; EFFECTIVE TIME. The consummation of the Merger (the
"Closing") shall take place at the offices of Cooley Godward LLP, Five Palo Alto
Square, 0000 Xx Xxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, at 10:00 a.m. on a date to
be designated by Parent (the "Closing Date"), which shall be no later than the
third business day after the satisfaction or waiver of the last to be satisfied
or waived of the conditions set forth in Section 7. Subject to the provisions of
this Agreement, a certificate of merger satisfying the applicable requirements
of the DGCL shall be duly executed by the Company and, concurrently with or as
soon as practicable following the Closing, delivered to the Secretary of State
of the State of Delaware for filing. The Merger shall become effective upon the
date and time of the filing of such certificate of merger with the Secretary of
State of the State of Delaware (the "Effective Time").
2.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
(a) The Certificate of Incorporation of the Surviving Corporation shall
be amended and restated as of the Effective Time to conform to Annex III.
(b) Unless otherwise determined by Parent prior to the Effective Time:
(i) the Bylaws of the Surviving Corporation shall be amended
and restated as of the Effective Time to conform to the Bylaws of
Acquisition Sub as in effect immediately prior to the Effective Time;
and
(ii) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the respective
individuals who are directors and officers of Acquisition Sub
immediately prior to the Effective Time.
2.5 CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger and without any
further action on the part of Parent, Acquisition Sub, the Company or any
stockholder of the Company:
(i) any shares of Company Common Stock then held by the
Company or any wholly owned Subsidiary of the Company (or held in the
Company's
8.
treasury) shall be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange therefor;
(ii) any shares of Company Common Stock then held by Parent,
Acquisition Sub or any other wholly owned Subsidiary of Parent shall be
canceled and retired and shall cease to exist, and no consideration
shall be delivered in exchange therefor;
(iii) except as provided in clauses "(i)" and "(ii)" above and
subject to Sections 2.5(b), 2.5(c) and 2.7, each share of Company
Common Stock then outstanding shall be converted into the right to
receive a cash amount equal to the Offer Price, without interest (the
"Merger Consideration"); and
(iv) each share of the common stock, $0.01 par value per
share, of Acquisition Sub then outstanding shall be converted into the
number of shares of common stock of the Surviving Corporation
determined by dividing (i) the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time by (ii) 100.
(b) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Company Common Stock are changed into a different number
or class of shares by reason of any stock split, division or subdivision of
shares, stock dividend, reverse stock split, consolidation of shares,
reclassification, recapitalization or other similar transaction, then the Merger
Consideration shall be appropriately adjusted to reflect such change.
(c) If any shares of Company Common Stock outstanding immediately prior
to the Effective Time are unvested or are subject to a repurchase option, risk
of forfeiture or other condition under any applicable restricted stock purchase
agreement or other agreement with the Company or under which the Company has any
rights, then, to the extent the Company has the legal or contractual right to do
so, the Company shall use reasonable efforts to ensure that: (i) the
consideration payable in the Merger with respect thereto will also be unvested
or subject to the same repurchase option, risk of forfeiture or other condition;
and (ii) from and after the Effective Time, Parent is entitled to exercise any
such repurchase option or any similar right as the Company's assignee.
2.6 SURRENDER OF CERTIFICATES; STOCK TRANSFER BOOKS.
(a) At the Effective Time: (a) all shares of Company Common Stock
outstanding immediately prior to the Effective Time shall automatically be
canceled and retired and shall cease to exist, and all holders of certificates
representing shares of Company Common Stock that were outstanding immediately
prior to the Effective Time shall cease to have any rights as stockholders of
the Company; and (b) the stock transfer books of the Company shall be closed
with respect to all shares of Company Common Stock outstanding immediately prior
to the Effective Time. No further transfer of any such shares of Company Common
Stock shall be made on such stock transfer books after the Effective Time. If,
after the Effective Time, a valid certificate previously representing any shares
of Company Common Stock (a "Company Stock Certificate") is presented to the
Paying Agent (as defined in Section 2.6(b)) or to the Surviving
9.
Corporation or Parent, such Company Stock Certificate shall be canceled and
shall be exchanged as provided in this Section 2.6.
(b) Prior to the Effective Time, Parent shall designate a reputable
bank or trust company, which bank or trust company shall be reasonably
acceptable to the Company, to act as agent (the "Paying Agent") for the holders
of shares of Company Common Stock to receive the funds to which holders of such
shares shall become entitled pursuant to Section 2.5. Parent shall (or shall
cause Acquisition Sub to), at or prior to the Effective Time, deposit with the
Paying Agent the cash consideration referred to in Section 2.5(a)(iii). Such
funds shall be invested by the Paying Agent as directed by the Surviving
Corporation; PROVIDED, HOWEVER, that Parent shall promptly replace any monies
lost through any investment made pursuant to this Section 2.6(b) and Parent
shall in any event be liable for the payment of the cash consideration referred
to in Section 2.5(a)(iii), notwithstanding any such losses.
(c) As soon as reasonably practicable after the Effective Time, Parent
shall cause the Paying Agent to mail to the record holders of Company Common
Stock entitled to receive Merger Consideration (i) a letter of transmittal in
customary form and containing such provisions as Parent may reasonably specify
(including a provision confirming that delivery of the Company Stock
Certificates shall be effected, and risk of loss and title to Company Stock
Certificates shall pass, only upon delivery of such Company Stock Certificates
to the Exchange Agent), and (ii) instructions for use in effecting the surrender
of Company Stock Certificates in exchange for the cash consideration referred to
in Section 2.5(a)(iii). Upon surrender of a Company Stock Certificate to the
Exchange Agent for exchange, together with a duly executed letter of transmittal
and such other documents as may be reasonably required by the Exchange Agent or
Parent, (1) the holder of such Company Stock Certificate shall be entitled to
receive, in exchange for each share of Company Common Stock previously
represented by such Company Stock Certificate, the Merger Consideration, and (2)
the Company Stock Certificate so surrendered shall be canceled. In the event of
a transfer of ownership of any share of Company Common Stock prior to the
Effective Time that has not been registered in the transfer records of the
Company, the Merger Consideration payable in respect of such share of Company
Common Stock shall be paid to the transferee of such share if the Company Stock
Certificate that previously represented such share is presented to the Paying
Agent accompanied by all documents required to evidence and effect such transfer
and to evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.6(c), each Company Stock
Certificate shall be deemed, from and after the Effective Time, to represent
only the right to receive the Merger Consideration with respect to each share of
Company Common Stock represented by such Company Stock Certificate. If any
Company Stock Certificate shall have been lost, stolen or destroyed, Parent may,
in its discretion and as a condition precedent to the payment of any Merger
Consideration, require the owner of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as Parent may reasonably direct, but not more than market value plus a
reasonable sum to cover applicable costs incurred by Parent or the Surviving
Corporation) as indemnity against any claim that may be made against the Paying
Agent, Parent or the Surviving Corporation with respect to such Company Stock
Certificate, and upon compliance with any such condition precedent, if any,
Parent shall cause the Paying Agent to pay the Merger Consideration in respect
of any share previously represented by such Company Stock Certificate in
accordance with this Section 2.6.
10.
(d) At any time following the 180th day after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds which had been made available to the Paying Agent and not
disbursed to the holders of Company Stock Certificates, and any holder of a
Company Stock Certificate that has not theretofore surrendered its Company Stock
Certificate in accordance with this Section 2.6 shall thereafter look only to
Parent as a general creditor of Parent for satisfaction of such holder's claim
for any Merger Consideration that may be payable upon due surrender of the
Company Stock Certificate held by such holder.
(e) Each of the Paying Agent, Parent and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this Agreement to any holder or former holder
of Company Common Stock such amounts as may be required to be deducted or
withheld therefrom under the Code or any provision of state, local or foreign
tax law or under any other applicable Legal Requirement, whereupon Parent will
pay or cause payment of such amounts to the appropriate Governmental Bodies as
and when due. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the Person to whom such amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable to any
holder or former holder of Company Common Stock or to any other Person with
respect to any Merger Consideration that may be payable upon due surrender of
any Company Stock Certificate that is delivered to any public official pursuant
to any applicable abandoned property law, escheat law or similar Legal
Requirement. If any Company Stock Certificate has not been surrendered by the
earlier of (i) the fifth anniversary of the date on which the Merger becomes
effective and (ii) the date immediately prior to the date on which the cash
amount that such Company Common Stock Certificate represents the right to
receive would otherwise escheat to or become the property of any Governmental
Body, then such cash amount shall, to the extent permitted by applicable Legal
Requirements, become the property of the Surviving Corporation, free and clear
of all claims or interest of any Person previously entitled thereto. Except as
otherwise provided in this Agreement, the Surviving Corporation shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of the cash consideration referred to in Section 2.5(a)(iii) for
shares of Company Common Stock.
2.7 SHARES SUBJECT TO APPRAISAL RIGHTS.
(a) Notwithstanding anything to the contrary contained in this
Agreement, any share of Company Common Stock that, as of the Effective Time, is
held by a holder who has preserved appraisal rights under Section 262 of the
DGCL with respect to such share shall not be converted into or represent the
right to receive the Merger Consideration, and the holder of such share shall be
entitled only to such rights with respect to such share as may be granted to
such holder pursuant to Section 262 of the DGCL; PROVIDED, HOWEVER, that if such
appraisal rights shall not be perfected or the holder of such share shall
otherwise lose such holder's appraisal rights with respect to such share, then,
as of the later of the Effective Time or the time of the failure to perfect such
status or the loss of such rights, such share shall automatically be converted
into and shall represent only the right to receive (upon the surrender of the
certificate representing such share) the Merger Consideration.
11.
(b) The Company shall give Parent (i) prompt notice of any written
demand received by the Company prior to the Effective Time to require the
Company to purchase shares of Company Common Stock pursuant to Section 262 of
the DGCL, and (ii) the opportunity to participate in all negotiations and
proceedings with respect to any such demand, notice or instrument. The Company
shall not make any payment or settlement offer prior to the Effective Time with
respect to any such demand unless Parent shall have consented in writing to such
payment or settlement offer.
2.8 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation with full
right, title and possession of and to all rights and property of Acquisition Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Acquisition Sub, in the name of
the Company and otherwise) to take such action.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Section 9.6(a), except as set forth in the applicable part
of the Company Disclosure Schedule or (subject to Section 9.12(e)) as expressly
set forth in the factual disclosures contained in the Company SEC Documents (as
defined in Section 3.4) filed with the SEC from January 1, 2002 through the date
of this Agreement or in any exhibit thereto (including exhibits incorporated by
reference therein), the Company represents and warrants to Parent and
Acquisition Sub as follows:
3.1 SUBSIDIARIES; DUE ORGANIZATION; ETC.
(a) The Company has no Subsidiaries, except for Avid Corporation, a
Pennsylvania corporation ("Avid"), and Triangle Pharma, Limited, a company
organized under the laws of England and Wales ("Triangle Pharma"); and neither
the Company nor either of its Subsidiaries owns any capital stock of, or any
equity interest of any nature in, any other Entity, other than capital stock of
Avid and Triangle Pharma and the capital stock and equity interests held by the
Company for passive investment in connection with the management of working
capital as reflected in the notes to the Unaudited Interim Balance Sheet. (The
Company and its Subsidiaries are referred to collectively in this Agreement as
the "Acquired Corporations.") None of the Acquired Corporations has agreed or is
obligated to make, or is bound by any Contract under which it may become
obligated to make, any future investment in or capital contribution to any other
Entity. None of the Acquired Corporations has, at any time since January 1,
2000, been a general partner of any general partnership or limited partnership.
(b) Each of the Acquired Corporations is a corporation duly organized,
validly existing and in good standing (to the extent such concept is recognized)
under the laws of the jurisdiction of its incorporation and has all necessary
corporate power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Contracts by which it is bound.
12.
(c) Each of the Acquired Corporations is qualified or registered to do
business as a foreign corporation, and is in good standing (to the extent such
concept is recognized), under the laws of all jurisdictions where the nature of
its business requires such qualification or registration and where the potential
consequences of failing to be so qualified or registered are materially adverse
to such Acquired Corporation.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The Company has made
available to Parent accurate and complete copies of the certificate of
incorporation, bylaws and other charter and organizational documents of the
respective Acquired Corporations, including all amendments thereto.
3.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of: (i)
175,000,000 shares of Company Common Stock, of which 76,904,133 shares have been
issued and are outstanding as of the date of this Agreement; and (ii) 10,000,000
shares of Preferred Stock, $.001 par value per share, (A) 170,000 shares of
which have been designated "Series A Preferred Stock," none of which are
outstanding as of the date of this Agreement, (B) 230,000 shares of which have
been designated "Series B Preferred Stock," none of which are outstanding as of
the date of this Agreement and (C) 1,200,000 of which have been designated
"Series B Junior Participating Preferred Stock," none of which are outstanding
as of the date of this Agreement. The Company does not hold any shares of its
capital stock in its treasury. All of the outstanding shares of Company Common
Stock have been duly authorized and validly issued, and are fully paid and
nonassessable. There are no shares of Company Common Stock held by either of the
Company's Subsidiaries. None of the outstanding shares of Company Common Stock
is entitled or subject to any preemptive right, right of participation, right of
maintenance or any similar right. None of the outstanding shares of Company
Common Stock is subject to any right of first refusal in favor of any of the
Acquired Corporations. There is no Acquired Corporation Contract relating to the
voting or registration of, or restricting any Person from purchasing, selling,
pledging or otherwise disposing of (or granting any option or similar right with
respect to) any shares of Company Common Stock. None of the Acquired
Corporations is under any obligation, or is bound by any Contract pursuant to
which it may become obligated, to repurchase, redeem or otherwise acquire any
outstanding shares of Company Common Stock.
(b) As of the date of this Agreement: (i) all of the shares of the
Company's Series B Junior Participating Preferred Stock are reserved for future
issuance upon exercise of the rights (the "Rights") issued pursuant to the
Rights Agreement, dated as of February 1, 1999 between the Company and American
Stock Transfer & Trust Company, as Rights Agent (as amended by that certain
Amendment to Rights Agreement, dated as of June 2, 1999, that certain Amendment
to Rights Agreement, dated as of August 24, 2001, and that certain Amendment to
Rights Agreement, dated as of July 30, 2002, the "Company Rights Agreement");
(ii) 10,953,922 shares of Company Common Stock are subject to issuance pursuant
to stock options granted and outstanding under the Company's Amended and
Restated 1996 Stock Incentive Plan (the "Company Option Plan"); (iii) 58,040
shares of Company Common Stock are reserved for future issuance pursuant to the
Company's 1996 Employee Stock Purchase Plan (the "ESPP"); (iv) 2,300,000 shares
of Company Common Stock are reserved for future issuance pursuant to the CEO
Incentive Plan; and (v) 300,000 shares of
13.
Company Common Stock are reserved for future issuance to Ramius Securities, LLC
pursuant to a Common Stock Underwriting Agreement, dated as of November 1, 2000,
between Ramius Securities, LLC and the Company. (Options to purchase shares of
Company Common Stock (whether granted by the Company pursuant to the Company
Option Plan, assumed by the Company in connection with any merger, acquisition
or similar transaction or otherwise issued or granted) are referred to in this
Agreement as "Company Options.") Part 3.3(b) of the Company Disclosure Schedule
sets forth the following information, accurate in all material respects, with
respect to each Company Option outstanding as of the date of this Agreement: (i)
the particular plan (if any) pursuant to which such Company Option was granted;
(ii) the name of the optionee; (iii) the number of shares of Company Common
Stock subject to such Company Option; (iv) the exercise price of such Company
Option; (v) the date on which such Company Option was granted; (vi) the
applicable vesting schedule (and the terms of any right to accelerate the
vesting of such Company Option), and the extent to which such Company Option is
vested and exercisable as of the date of this Agreement; and (vii) the date on
which such Company Option expires. The Company has made available to Parent
accurate and complete copies of all stock option plans governing any stock
options granted by any Acquired Corporation that are outstanding as of the date
of this Agreement, and the forms of all stock option agreements evidencing such
options.
(c) Except as provided in the Financing Documents and except as set
forth in Section 3.3(b) above, there is no: (i) outstanding subscription,
option, call, warrant or right (whether or not currently exercisable) to acquire
any shares of the capital stock or other securities of any of the Acquired
Corporations; (ii) outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any shares of the capital stock or
other securities of any of the Acquired Corporations; or (iii) stockholder
rights plan (or similar plan or Contract commonly referred to as a "poison
pill") under which any of the Acquired Corporations is or may become obligated
to sell or otherwise issue any shares of its capital stock or any other
securities.
(d) All outstanding shares of Company Common Stock, options, warrants
and other securities of the Acquired Corporations have been issued and granted
in compliance in all material respects with (i) all applicable securities laws
and other applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts.
(e) All of the outstanding shares of capital stock of each of the
Company's Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and are owned beneficially and of record by
the Company, free and clear of any Encumbrances.
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has made available to Parent accurate and complete
copies of each registration statement, proxy statement and other statement,
report, schedule, form and other document filed by the Company with the SEC
since January 1, 2000, and all amendments thereto (the "Company SEC Documents").
Neither of the Company's Subsidiaries is required to file any documents with the
SEC. As of the time it was filed with the SEC (or, if
14.
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing): (i) each of the Company SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be) and, to the extent not included in the
Exchange Act or the Securities Act, the Xxxxxxxx-Xxxxx Act of 2002 (the
"Xxxxxxxx-Xxxxx Act"); and (ii) except to the extent that information contained
in any Company SEC Document has been revised or superseded by a later filed
Company SEC Document filed prior to the date of this Agreement, none of the
Company SEC Documents when filed contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The principal
executive officer of the Company and the principal financial officer of the
Company (and each former principal executive officer of the Company and each
former principal financial officer of the Company, as applicable) has made the
certifications required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act and
the rules and regulations of the SEC thereunder with respect to the Company's
filings pursuant to the Exchange Act. For purposes of the preceding sentence,
"principal executive officer" and "principal financial officer" shall have the
meanings given to such terms in the Xxxxxxxx-Xxxxx Act.
(b) Except to the extent stated therein, the financial statements
(including any related notes) contained in the Company SEC Documents: (i) when
filed, complied as to form in all material respects with the published rules and
regulations of the SEC applicable thereto; (ii) when filed, were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered (except as may be indicated in the notes to
such financial statements or, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC, and except that the unaudited financial statements may
not contain footnotes and are subject to normal and recurring year-end
adjustments that will not, individually or in the aggregate, be material in
amount), and (iii) fairly present the consolidated financial position of the
Company and its Subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows of the Company and its
Subsidiaries for the periods covered thereby (except as may be indicated in the
notes to such financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC, and except that the unaudited financial
statements may not contain footnotes and are subject to normal and recurring
year-end adjustments that will not, individually or in the aggregate, be
material in amount).
3.5 ABSENCE OF CHANGES. From September 30, 2002 through the date of
this Agreement, and except for the transactions contemplated by this Agreement
or the Financing Documents that are to occur contemporaneously with the
execution hereof:
(a) there was no event, and no circumstance arose, that
individually or in combination with any other events or circumstances,
has had a material adverse effect on the Acquired Corporations taken as
a whole;
(b) none of the Acquired Corporations (i) declared, accrued,
set aside or paid any dividend or made any other distribution in
respect of any shares of capital stock, or (ii) repurchased, redeemed
or otherwise reacquired any shares of capital stock or other
securities;
15.
(c) none of the Acquired Corporations sold, issued or granted,
or authorized the sale, issuance or grant of, (i) any capital stock or
other security (except for Company Common Stock issued upon the valid
exercise of outstanding Company Options), (ii) any option, call,
warrant or right to acquire any capital stock or other security (except
for Company Options), or (iii) any instrument convertible into or
exchangeable for any capital stock or other security;
(d) the Company did not (i) amend or waive any of its rights
under, or permit the acceleration of vesting under, (A) any provision
of the Company Option Plan, (B) any provision of any Contract
evidencing any outstanding Company Option, or (C) any restricted stock
purchase agreement or (ii) otherwise modify any of the terms of any
outstanding option or other security or any related Contract;
(e) there was no amendment to the certificate of
incorporation, bylaws or other charter or organizational documents of
any of the Acquired Corporations, and none of the Acquired Corporations
effected or was a party to any merger, consolidation, share exchange,
business combination, amalgamation, recapitalization, reclassification
of shares, stock split, reverse stock split, division or subdivision of
shares, consolidation of shares or similar transaction;
(f) none of the Acquired Corporations made any capital
expenditure which, when added to all other capital expenditures made on
behalf of the Acquired Corporations from September 30, 2002 through the
date of this Agreement, exceeds $250,000 in the aggregate;
(g) except in the ordinary course of business and consistent
with past practices, none of the Acquired Corporations (i) entered into
or become bound by, or permitted any of the assets owned or used by it
to become bound by, any Material Contract (as defined in Section 3.10),
or (ii) amended or terminated, or waived or exercised any material
right or remedy under, any Material Contract;
(h) except in the ordinary course of business and consistent
with past practices, none of the Acquired Corporations (i) acquired,
leased or licensed any material right or other material asset from any
other Person, (ii) sold or otherwise disposed of, or leased or
licensed, any right or other asset to any other Person, or (iii) waived
or relinquished any material right, except (in each case) for rights or
other assets acquired, leased, licensed or disposed of or otherwise
licensed on a non-exclusive basis only for research or to enable third
parties to provide services to the Acquired Corporations;
(i) none of the Acquired Corporations wrote off as
uncollectible, or established any extraordinary reserve with respect
to, any indebtedness in excess of $100,000 in the aggregate;
(j) none of the Acquired Corporations made any pledge of any
of its assets or otherwise permitted any of its material assets to
become subject to any Encumbrance;
16.
(k) none of the Acquired Corporations (i) lent money to any
Person (which shall not be deemed to include the prepayment of business
expenses in the ordinary course of business and consistent with past
practices), or (ii) incurred or guaranteed any indebtedness for
borrowed money;
(l) none of the Acquired Corporations (i) adopted, established
or entered into any Company Employee Plan, (ii) caused or permitted any
Company Employee Plan to be amended in any material respect, or (iii)
paid any bonus or made any profit-sharing or similar payment to, or
materially increased the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any
of its directors, officers or employees except as disclosed elsewhere
in the Company Disclosure Schedule or in the ordinary course of
business and consistent with past practices;
(m) none of the Acquired Corporations changed any of its
methods of accounting or accounting practices in any material respect,
except as required by generally accepted accounting principles;
(n) none of the Acquired Corporations made any material Tax
election;
(o) none of the Acquired Corporations commenced or settled any
material Legal Proceeding; and
(p) none of the Acquired Corporations agreed or committed to
take any of the actions referred to in clauses "(b)" through "(o)"
above.
3.6 TITLE TO ASSETS. As of the date of this Agreement, the Acquired
Corporations own, and have good and valid title to the rights and other assets
reflected on the Unaudited Interim Balance Sheet (except for inventory sold or
otherwise disposed of in the ordinary course of business since the date of the
Unaudited Interim Balance Sheet, and except for any Intellectual Property Rights
or Intellectual Property which is covered under Section 3.9), subject only to
deficiencies of title which do not in the aggregate have a material adverse
effect on the Acquired Corporations taken as a whole. As of the date of this
Agreement, all of said rights and other assets are owned by the Acquired
Corporations free and clear of any Encumbrances, except for (1) any Encumbrance
for current Taxes not yet due and payable and (2) Encumbrances that do not (in
any case or in the aggregate) materially detract from the value of the assets
subject thereto or materially impair the operations of the Acquired Corporations
taken as a whole.
3.7 REAL PROPERTY. None of the Acquired Corporations owns any real
property or any interest in real property.
3.8 INVENTORIES.
(a) Part 3.8(a) of the Company Disclosure Schedule provides, as of the
date of this Agreement: (i) in Part 3.8(a)(i) of the Company Disclosure
Schedule, an accurate and complete summary (by quantity and expiration/retest
date) of each Acquired Corporation's
17.
existing inventories of Bulk Emtricitabine (except for discrepancies that are
reasonably acceptable according to customary pharmaceutical industry practices),
manufactured by Xxxxxx under the Xxxxxx Agreement and (ii) in Part 3.8(a)(ii) of
the Company Disclosure Schedule, an accurate and complete summary (by quantity
and delivery date for each such order) of each Acquired Corporation's
outstanding firm orders placed with, and accepted by, Xxxxxx for Bulk
Emtricitabine, to be manufactured by Xxxxxx under the Xxxxxx Agreement. To the
Knowledge of the Company, the inventories referred to above in this subsection
were manufactured by Xxxxxx in accordance in all material respects with the
requirements of and warranties specified in the Xxxxxx Agreement therefor. No
Acquired Corporation has any outstanding firm order placed with, and accepted
by, Xxxxxx for Finished Emtricitabine.
(b) Part 3.8(b) of the Company Disclosure Schedule sets forth an
accurate and complete breakdown of the pricing applicable to the Company's firm
orders for the purchase of Bulk Emtricitabine and Finished Emtricitabine from
Xxxxxx as of the date of this Agreement.
(c) For each Company Pharmaceutical Product, the total of the Acquired
Corporations' inventories, in bulk active pharmaceutical and finished product
form, plus the quantities thereof represented by the Acquired Corporations' firm
orders therefor, are reasonably sufficient for the conduct of all clinical
trials being conducted by or on behalf of any of the Acquired Corporations
thereon for the next four (4) months.
3.9 INTELLECTUAL PROPERTY.
(a) Part 3.9(a) of the Company Disclosure Schedule accurately
identifies in all material respects, with respect to each Company Pharmaceutical
Product, all material Acquired Corporation Patent Rights necessary or, to the
Knowledge of the Company, currently intended for use, in the manufacture, use,
import, offer for sale, sale or other development or commercialization of such
Company Pharmaceutical Product, that is owned by or licensed to the Acquired
Corporations (all such material Acquired Corporation Patent Rights required to
be identified in Part 3.9(a) of the Company Disclosure Schedule being referred
to as "Product IP"), and, for each item of Product IP, (i) whether it is
Registered IP, and if it is Registered IP the jurisdiction in which such item of
Registered IP has been registered or filed and the applicable registration or
serial number; (ii) the identity of any other Person that has an ownership
interest in such item of Product IP and the nature of such ownership interest;
(iii) the identity of any license agreement under which the Company has obtained
rights in such item of Product IP; and (iv) any Contract pursuant to which any
of the Acquired Corporations has granted or made any license, material right
(including any right to receive any royalty payment, milestone payment, success
payment or maintenance fee or similar fee) or material Encumbrance to, under or
in connection with such item of Product IP to or in favor of any other Person,
other than non-exclusive licenses only for research or manufacturing on behalf
of the Acquired Corporations. The Company has provided Parent with an accurate
and complete copy of the License Agreement, dated as of April 17, 1996, between
the Company and Emory University relating to Emtricitabine.
(b) The Acquired Corporations have sufficient right, title and interest
in and to the Product IP:
18.
(i) to conduct the business of the Acquired Corporations in
substantially the same manner as currently conducted, including its
proposed plans to make, have made, import, offer for sale, sell and
otherwise develop and commercialize each Company Pharmaceutical Product
worldwide, to the Knowledge of the Company (A) with no payment
obligation to any Person or with respect to any Product IP other than
as set forth in any license agreement listed or required to be listed
in Part 3.9(a) of the Company Disclosure Schedule and (B) without
materially infringing (directly, contributorily, by inducement or
otherwise), materially misappropriating or otherwise materially
violating any material Intellectual Property Right of any other Person,
except as otherwise described in Part 3.9(b)(i) of the Company
Disclosure Schedule;
(ii) to the Knowledge of the Company, to exclude all other
Persons from making, having made, importing, offering for sale, selling
and otherwise developing and commercializing each Company
Pharmaceutical Product in the countries listed or required to be listed
in Part 3.9(a) of the Company Disclosure Schedule to the extent
allowable by that country and except as otherwise described in Part
3.9(b)(ii) of the Company Disclosure Schedule; and
(iii) to the Knowledge of the Company, to make, have made,
import, offer for sale, sell and otherwise develop and commercialize a
Combination Product of Emtricitabine in combination with adefovir
dipivoxil or any other compound yielding adefovir in vivo, or with
tenofovir disoproxil fumarate or any other compound yielding tenofovir
in vivo ("Emtricitabine Combination") without materially
misappropriating or otherwise materially violating any material
Intellectual Property Right of any other Person.
(c) To the Knowledge of the Company, except as described in Part 3.9(c)
of the Company Disclosure Schedule, none of SmithKline-Xxxxxxx Corporation, a
Pennsylvania corporation (d/b/a GlaxoSmithKline), Glaxo Group Limited, a
corporation organized under the laws of England and Wales, GlaxoSmithKline,
Inc., a Canadian corporation, Shire Pharmaceuticals Group plc, a corporation
organized under the laws of England and Wales, Shire-Biochem, Inc., a Canadian
corporation, and Emory University, a Georgia non-profit corporation, has the
right or ability, under any Contract to which an Acquired Corporation or Emory
University is a party, or under any Intellectual Property Right claiming any
composition of matter, method of use or method of manufacture of Emtricitabine,
whether as a sole active pharmaceutical ingredient or as an Emtricitabine
Combination, to exclude, enjoin or prevent any of the Acquired Corporations
from, or to xxx or require payment from any of the Acquired Corporations with
respect to, manufacturing, having manufactured, using, importing, offering for
sale, selling or otherwise developing or commercializing, in each case
worldwide, any Emtricitabine Combination.
(d) To the Knowledge of the Company: (i) each material granted claim
that covers a Company Pharmaceutical Product or its method of pharmaceutical use
or manufacture in an Acquired Corporation Patent Right is valid, subsisting and
enforceable, and (ii) there is no basis for a claim that any such material
granted claim in any Acquired Corporation Patent Right is invalid or
unenforceable in any material respect.
19.
(e) Neither (i) the execution, delivery or performance of this
Agreement or the Financing Documents, nor (ii) the acquisition of or payment for
any shares of Company Common Stock by Acquisition Sub pursuant to the Offer or
the consummation of the Merger or any of the other transactions contemplated by
this Agreement or the Financing Documents will, with or without notice or the
lapse of time, result in or give any other Person the right or option to cause
or declare: (A) a loss of, or material Encumbrance on, any Product IP; (B) a
material breach of any Contract listed or required to be listed in Part 3.9(a)
of the Company Disclosure Schedule; (C) the release, disclosure or delivery of
any Product IP by or to any escrow agent or other Person; or (D) the grant,
assignment or transfer to any other Person of any material license or other
material right or material interest under, to or in any of the Product IP. Part
3.9(e) of the Company Disclosure Schedule identifies any Consent that any of the
Acquired Corporations was, is or will be required to obtain from any Person
under any Acquired Corporation Contract relating to Emtricitabine listed or
required to be listed in Part 3.9(a) of the Company Disclosure Schedule in
connection with (i) the execution, delivery or performance of this Agreement, or
(ii) the acquisition of or payment for any shares of Company Common Stock by
Acquisition Sub pursuant to the Offer or the consummation of the Merger or any
of the other transactions contemplated by this Agreement.
(f) To the Knowledge of the Company, no Person has materially
infringed, materially misappropriated, or otherwise materially violated, and no
Person is currently materially infringing, materially misappropriating or
otherwise materially violating, any Product IP. Part 3.9(f) of the Company
Disclosure Schedule accurately identifies in all material respects (and, to the
extent in the possession of any of the Acquired Corporations, the Company has
provided to Parent a complete and accurate copy of) each written or electronic
communication or correspondence that has been sent or otherwise delivered by or
to any of the Acquired Corporations or any other party to a Contract listed or
required to be listed in Part 3.9(a) of the Company Disclosure Schedule, or any
Representative of any of the Acquired Corporations or such other party to such a
Contract, regarding any actual, alleged or suspected material infringement or
material misappropriation of any Product IP and provides a brief description of
the current status of the matter referred to in such letter, communication or
correspondence.
(g) To the Knowledge of the Company with respect to Company
Pharmaceutical Products: (i) none of the Acquired Corporations has ever
materially infringed (directly, contributorily, by inducement or otherwise),
materially misappropriated or otherwise materially violated any Intellectual
Property Right of any other Person, and (ii) none of the parties to any of the
license agreements listed or required to be listed in Part 3.9(a) of the Company
Disclosure Schedule has, with respect to the Product IP, materially infringed
(directly, contributorily, by inducement or otherwise), materially
misappropriated or otherwise materially violated any Intellectual Property Right
of any other Person.
(h) Except as indicated in Part 3.9(h) of the Company Disclosure
Document, no material adversarial Legal Proceeding involving any material
Intellectual Property or material Intellectual Property Right owned by or
licensed to any of the Acquired Corporations is pending or, to the Knowledge of
the Company, has been threatened, except for any adversarial Legal Proceeding
that would not be reasonably likely to materially and adversely affect: (A) the
use or exploitation of such material Intellectual Property or material
Intellectual Property Right
20.
by any of the Acquired Corporations; or (B) the manufacturing, use, distribution
or sale of any Company Pharmaceutical Product.
(i) Except as disclosed in Part 3.9(i) of the Company Disclosure
Schedule, as of the date of this Agreement:
(i) there are no material claims or Legal Proceedings that
have been brought by or on behalf of an Acquired Corporation, asserting
that:
(1) any Person bound by an Acquired Corporation
Contract affecting or relating to the protection or disclosure
of Acquired Corporation Trade Secrets has breached such
Contract, or
(2) any Person has acquired, disclosed or misused any
Acquired Corporation Trade Secret in violation of any such
Contract, or
(3) any Person has acquired, disclosed or misused any
Acquired Corporation Trade Secret in violation of any Legal
Requirement,
if in any such case such breach, acquisition, disclosure or misuse
would be reasonably likely to result in a material adverse effect on
the development, manufacturing, use, distribution or sale of any
Company Pharmaceutical Product; and
(ii) there are no material claims or Legal Proceedings that
have been made or brought, or, to the Knowledge of the Company, have
been overtly threatened against an Acquired Corporation, or to the
Knowledge of the Company, have been made or brought against an employee
of an Acquired Corporation, asserting that any such Person has breached
any such Contract, or otherwise improperly disclosed, acquired or
misused a trade secret, that, if adversely determined, would materially
adversely affect the development, manufacturing, use, distribution or
sale of any Company Pharmaceutical Product.
3.10 CONTRACTS.
(a) Part 3.10 of the Company Disclosure Schedule identifies each
Acquired Corporation Contract in effect as of the date of this Agreement to
which any Acquired Corporation is a party that constitutes a "Material
Contract." (For purposes of this Agreement, "Material Contract" means:
(i) any Contract (A) pursuant to which any of the Acquired
Corporations is or may become obligated to make any severance,
termination or similar payment to any current or former employee or
director in excess of $100,000, or (B) providing for base salary by any
Acquired Corporation to any current employee in excess of $100,000 on
an annualized basis (unless the entire amount remaining to be paid
thereunder is less than $25,000);
21.
(ii) any Contract relating to the acquisition, transfer,
development, sharing or license of any Product IP by any Acquired
Corporation on an exclusive or co-exclusive (with the Company) basis,
including by field or territory;
(iii) any Contract (A) creating or relating to any partnership
or collaboration, or any joint development, joint marketing,
distribution or similar arrangement, other than research and
development collaborations conducted in the ordinary course of business
consistent with practices, or (B) in which any Acquired Corporation
grants any Person the right to market any product containing
Emtricitabine;
(iv) any Contract providing for the manufacture of Bulk
Emtricitabine or Finished Emtricitabine for any Acquired Corporation;
(v) any Contract with any clinical research organization (a
"CRO Contract") providing clinical trial services for any clinical
trial sponsored by any Acquired Corporation for any product containing
Emtricitabine;
(vi) any Contract that provides for indemnification of any
officer or director of any Acquired Corporation;
(vii) any Contract prohibiting any of the Acquired
Corporations (A) from competing with any other Person, (B) from
acquiring any product or other asset or any services from any other
Person, (C) from developing, selling, supplying, distributing,
offering, supporting or servicing any product or any technology or
other asset to or for any other Person, (D) from performing services
for any other Person, or (E) from transacting business or dealing in
any other manner with any other Person;
(viii) any Contract of a type required to be disclosed by
Section 3.3, other than any Contract providing for the grant of Company
Options; and
(ix) any Contract providing a guaranty in excess of $100,000.
The Company has delivered to Parent an accurate and complete copy of each
Acquired Corporation Contract that constitutes a Material Contract and is
identified on Part 3.10 of the Company Disclosure Schedule as having been
delivered to Parent (it being understood that to the extent any Material
Contract is based on a standard-form Contract of the Company, the Company has
only delivered the standard-form Contract unless such Material Contract deviates
in any material respect from such standard-form Contract, in which case the
Company has also provided an accurate and complete copy of such Material
Contract as well). The identification of an Acquired Corporation Contract on
Part 3.10 of the Company Disclosure Schedule shall not constitute such Acquired
Corporation Contract as a Material Contract if such Acquired Corporation
Contract is not encompassed within any of clauses "(i)" through "(ix)" above.
(b) As of the date of this Agreement, each Material Contract is valid
and in full force and effect, and is enforceable in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
22.
(c) Each of the CRO Contracts identified in Part 3.10(a)(v) of the
Company Disclosure Schedule is terminable and may be discontinued by the Company
at will (upon delivery of notice of not more than 90 days) without penalty or
cost (other than reimbursement for previously incurred or committed expenses) in
connection with the termination by the Company of the applicable research
program to which such Contract relates or the preclinical or clinical
development program to which such Contract relates.
(d) As of the date of this Agreement, except as otherwise has not had a
material adverse effect on the Acquired Corporations taken as a whole: (i) none
of the Acquired Corporations has materially violated or breached, or committed
any material default under, any Material Contract; and, to the Knowledge of the
Company, no other Person has materially violated or breached, or committed any
material default under, any Material Contract; and (ii) to the Knowledge of the
Company, no event has occurred, and no circumstance or condition exists, that
(with or without notice or lapse of time) is reasonably likely to (A) result in
a material violation or breach of any of the provisions of any Material
Contract, (B) give any Person the right to declare a material default or
exercise any material remedy under any Material Contract or (C) give any Person
the right to cancel, terminate or modify any Material Contract. From January 1,
2000 through the date of this Agreement, none of the Acquired Corporations has
received any written notice or to its Knowledge received any other communication
regarding any actual or possible material violation or breach of, or material
default under, any Material Contract, other than any which the Company has
addressed and resolved in a commercially reasonable manner.
(e) As of the date of this Agreement, each Acquired Corporation has
satisfied its respective diligence obligations (if any) under the specified
sections of each of the Acquired Corporation Contracts identified in Part
3.10(e) of the Company Disclosure Schedule, none of which have been amended
other than in a document a copy of which has been filed with the SEC by the
Company prior to the date of this Agreement.
(f) Each of the Acquired Corporation Contracts entered into since
January 1, 2000 to establish a clinical trial at any clinical site conformed in
form substantially with the standard form used by the Company as of the date of
such agreement. Since January 1, 2000 there has not been any material adverse
effect to any Phase III clinical trial conducted by any of the Acquired
Corporations resulting primarily from the breach of any such Acquired
Corporation Contracts by clinical site participating therein under any such
Contracts nor primarily due to the Company's relations in general with the
clinical sites participating therein, taken as a whole.
3.11 LIABILITIES. As of the date of this Agreement:
(a) None of the Acquired Corporations has any accrued, contingent or
other liabilities of any nature, either matured or unmatured ("Liabilities"), of
a type required by generally accepted accounting principles to be reflected on a
consolidated balance sheet of the Company or the notes thereto except for: (a)
Liabilities identified in the Unaudited Interim Balance Sheet or the notes
thereto; (b) current Liabilities that have been incurred by the Acquired
Corporations from September 30, 2002 through the date of this Agreement in
23.
the ordinary course of business and consistent with past practices; and (c)
Liabilities which have not had a material adverse effect on the Acquired
Corporations taken as a whole; and
(b) To the Company's Knowledge, none of the Acquired Corporations has
any other Liabilities, except for: (a) Liabilities identified in the Unaudited
Interim Balance Sheet or the notes thereto; (b) current Liabilities that have
been incurred by the Acquired Corporations in the ordinary course of business
and consistent with past practices; and (c) Liabilities which have not had a
material adverse effect on the Acquired Corporations taken as a whole.
3.12 COMPLIANCE WITH LEGAL REQUIREMENTS. Each of the Acquired
Corporations is as of the date of this Agreement, and at all times from January
1, 2000 through the date of this Agreement has been, in compliance in all
material respects with all applicable Legal Requirements. From January 1, 2000
through the date of this Agreement, none of the Acquired Corporations has
received any notice or to its Knowledge received any other communication from
any Governmental Body regarding any actual or possible material violation of, or
material failure to comply with, any Legal Requirement.
3.13 CERTAIN BUSINESS PRACTICES. As of the date of this Agreement, none
of the Acquired Corporations, and (to the Knowledge of the Company) no director,
officer, agent or employee of any of the Acquired Corporations, has (i) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity or (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended.
3.14 GOVERNMENTAL AUTHORIZATIONS; REGULATORY MATTERS.
(a) As of the date of this Agreement, (i) the Acquired Corporations
hold all material Governmental Authorizations necessary to enable the Acquired
Corporations to conduct their respective businesses in the manner in which such
businesses are currently being conducted, and (ii) all such Governmental
Authorizations are valid and in full force and effect. Each of the Acquired
Corporations is as of the date of this Agreement, and at all times from January
1, 2000 through the date of this Agreement has been, in material compliance with
the terms and requirements of such Governmental Authorizations. From January 1,
2000 through the date of this Agreement, none of the Acquired Corporations has
received any written notice or, to the Knowledge of the Company, any other
communication from any Governmental Body regarding (a) any actual or possible
violation of or failure to comply with any term or requirement of any material
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
material Governmental Authorization. No Governmental Body has at any time from
January 1, 2000 challenged in writing the right of any of the Acquired
Corporations to develop, manufacture, offer or sell any of the Company
Pharmaceutical Products.
(b) Each Company Pharmaceutical Product is being as of the date of this
Agreement, and at all times from January 1, 2000 through the date of this
Agreement has been, developed, tested, manufactured, labeled, stored,
distributed and marketed in compliance
24.
in all material respects with all applicable Legal Requirements, including those
relating to investigational use, premarket clearance, good manufacturing
practices, good clinical practices, good laboratory practices, recordkeeping,
filing of reports and security.
(c) The Company has made available to Parent each annual report filed
by any of the Acquired Corporations with the FDA with respect to any Company
Pharmaceutical Product or any similar state or foreign Governmental Body from
January 1, 2000 through the date of this Agreement.
(d) The Company has made available to Parent (i) accurate and complete
copies of each New Drug Application ("NDA") and Investigational New Drug
Application ("IND") and each similar state or foreign regulatory filing made on
behalf of any of the Acquired Corporations from January 1, 2000 through the date
of this Agreement, including all supplements, amendments and annual reports (and
with respect to the NDA for Coviracil filed by the Company with the FDA on
September 3, 2002 (the "Coviracil NDA"), has provided such NDA to Parent) and
(ii) all material correspondence received from the FDA and similar state and
foreign Governmental Bodies from January 1, 2000 through the date of this
Agreement that concerns a Company Pharmaceutical Product.
(e) As of the date of this Agreement, none of the Acquired Corporations
has Knowingly made an untrue statement of a material fact or fraudulent
statement to the FDA or any similar state or foreign Governmental Body,
Knowingly failed to disclose a material fact required to be disclosed to the FDA
or any similar state or foreign Governmental Body, or Knowingly committed an
act, made a statement or failed to make a statement, that (in any such case)
establishes a basis for the FDA to invoke its policy respecting "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities," set forth in 56
Fed. Reg. 46191 (September 10, 1991). None of the Acquired Corporations, nor any
officer, employee or to the Knowledge of the Acquired Corporations, any (i)
agent of any of the Acquired Corporations or (ii) principal investigator or
sub-investigator of any clinical investigation sponsored by any of the Acquired
Corporations has, on account of actions taken for or on behalf of any Acquired
Corporation, been convicted of any crime under 21 U.S.C. Section 335s(a) or any
similar state or foreign Legal Requirement or under 21 U.S.C. Section 335a(b) or
any similar state or foreign Legal Requirement.
(f) From January 1, 2000 through the date of this Agreement, no Company
Pharmaceutical Product has been recalled, suspended or discontinued as a result
of any action by the FDA or any similar state or foreign Governmental Body. From
January 1, 2000 through the date of this Agreement, no clinical trial of a
Company Pharmaceutical Product has been suspended, put on hold or terminated
prior to completion, and no IND for a Company Pharmaceutical Product has been
suspended, withdrawn, rejected or refused, in each case, as a result of any
action by the FDA or any similar state or foreign Governmental Body or
voluntarily by any of the Acquired Corporations based on serious adverse effects
on human health. None of the Acquired Corporations, no marketing partner nor
marketing licensee of an Acquired Corporation for any Company Pharmaceutical
Product (with respect to each Company Pharmaceutical Product licensed to such
marketing partner or marketing licensee), nor any Company Partner (with respect
to each Company Pharmaceutical Product manufactured by such Company Partner),
has received any written notice or, to the Knowledge of the Company, other
25.
communication from January 1, 2000 through the date of this Agreement indicating
that the FDA or any similar state or foreign Governmental Body has commenced or
threatened to initiate any action to withdraw approval, terminate clinical
development, request the recall of any Company Pharmaceutical Product, or to
enjoin or place any material restriction on the production, sale, marketing,
reimbursement or testing of any Company Pharmaceutical Product.
3.15 TAX MATTERS.
(a) Each of the Tax Returns required to be filed by or on behalf of the
respective Acquired Corporations with any Governmental Body with respect to any
taxable period ending on or before the Closing Date (the "Acquired Corporation
Returns") (i) has been or will be filed on or before the applicable due date
(including any extensions of such due date), and (ii) has been, or will be when
filed, prepared in all material respects in compliance with all applicable Legal
Requirements. All amounts shown on the Acquired Corporation Returns to be due on
or before the Closing Date have been or will be paid on or before the Closing
Date.
(b) The Unaudited Interim Balance Sheet fully accrues all actual and
contingent liabilities for Taxes with respect to all periods through September
30, 2002 in accordance with generally accepted accounting principles. Each of
the Acquired Corporations will establish, in the ordinary course of business and
consistent with its past practices, reserves adequate for the payment of all
Taxes for the period from September 30, 2002 through the Closing Date.
(c) No Acquired Corporation Return has been examined or audited since
January 1, 2000, and no Acquired Corporation has received written notice of any
current examination or audit by any Governmental Body. No current extension or
waiver of the limitation period applicable to any of the Acquired Corporation
Returns has been granted by any Acquired Corporation, and no such extension or
waiver has been requested from any of the Acquired Corporations.
(d) No claim or Legal Proceeding is pending as of the date of this
Agreement or, to the Knowledge of the Company, has been threatened against or
with respect to any of the Acquired Corporations in respect of any material Tax.
There are no material unsatisfied liabilities for Taxes (including liabilities
for interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency or similar document received by any of the
Acquired Corporations with respect to any material Tax (other than liabilities
for Taxes asserted under any such notice of deficiency or similar document which
are being contested in good faith by the Acquired Corporations and with respect
to which adequate reserves for payment have been established on the Unaudited
Interim Balance Sheet). There are no liens for material Taxes upon any of the
assets of any of the Acquired Corporations except liens for current Taxes not
yet due and payable. None of the Acquired
26.
Corporations has entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code (or any comparable provision of state or
foreign Tax laws). None of the Acquired Corporations has been, and none of the
Acquired Corporations will be, required to include any adjustment in taxable
income for any tax period (or portion thereof) pursuant to Section 481 or 263A
of the Code (or any comparable provision of state or foreign Tax laws) as a
result of any transaction or event occurring, or accounting methods employed,
prior to the Closing. None of the Acquired Corporations has made any
distribution of stock of any controlled corporation, as that term is defined in
Code Section 355(a)(1).
(e) There is no agreement, plan, arrangement or other Contract covering
any employee or independent contractor or former employee or independent
contractor of any of the Acquired Corporations that, considered individually or
considered collectively with any other such Contracts, is reasonably likely to
give rise directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G or Section 162 of the Code (or any
comparable provision under state or foreign Tax laws). None of the Acquired
Corporations is, or has ever been, a party to or bound by any tax indemnity
agreement, tax sharing agreement, tax allocation agreement or similar Contract.
3.16 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) The Company Disclosure Schedule accurately sets forth as of the
date of this Agreement the following information, accurate in all material
respects, with respect to each employee of each of the Acquired Corporations
(including any employee of any of the Acquired Corporations who is on a leave of
absence or on layoff status):
(i) the name of such employee, the Acquired Corporation by
which such employee is employed and the date as of which such employee
was originally hired by such Acquired Corporation;
(ii) such employee's title; and
(iii) the salary received by such employee (A) with respect to
services performed in 2001 and (B) with respect to services performed
from January 1 through November 30, 2002.
(b) As of the date of this Agreement, the employment of each of the
Acquired Corporations' employees is terminable by the applicable Acquired
Corporation at will (subject to notice periods not longer than sixty (60) days).
(c) To the Knowledge of the Company, no employee of any of the Acquired
Corporations is a party to or is bound by any confidentiality agreement,
noncompetition agreement or other Contract (with any Person) that is reasonably
likely to have a material adverse effect on the Acquired Corporations taken as a
whole.
(d) As of the date of this Agreement, none of the Acquired Corporations
is a party to or bound by any union Contract or collective bargaining agreement.
(e) As of the date of this Agreement, none of the Acquired Corporations
is engaged in any unfair labor practice of any nature. From January 1, 2002
through the date of this Agreement, there has not been any slowdown, work
stoppage, labor dispute or union organizing activity, or any similar activity or
dispute, affecting any of the Acquired Corporations or any of their employees.
As of the date of this Agreement, there is not now pending, and to the Knowledge
of the Company, no Person has threatened to commence, any such slowdown, work
stoppage, labor dispute or union organizing activity or any similar
27.
activity or dispute. As of the date of this Agreement, there are no actions,
suits, claims, labor disputes or grievances pending or, to the Knowledge of the
Company, threatened relating to any labor, safety or discrimination matters
involving any Company Employee, including charges of unfair labor practices or
discrimination complaints.
(f) Part 3.16(f) of the Company Disclosure Schedule lists each Company
Employee Plan and each Company Employee Agreement in effect as of the date of
this Agreement. None of the Acquired Corporations intends or has committed to
establish or enter into any new Company Employee Plan, or to modify any Company
Employee Plan (except to conform any such Company Employee Plan to the
requirements of any applicable Legal Requirements, in each case as disclosed to
Parent in writing prior to the date of this Agreement or as required by this
Agreement).
(g) As of the date of this Agreement:
(i) each of the Acquired Corporations and Company Affiliates
has performed in all material respects all material obligations
required to be performed under each Company Employee Plan;
(ii) none of the Acquired Corporations is in default or
violation in any material respect of, and the Company does not have
Knowledge of any material default or material violation by any other
party to, the terms of any Company Employee Plan;
(iii) each Company Employee Plan has been established and
maintained substantially in accordance with its terms and in compliance
in all material respects with all applicable Legal Requirements,
including ERISA and the Code;
(iv) any Company Employee Plan intended to be qualified under
Section 401(a) of the Code has obtained a favorable determination
letter (or opinion letter, if applicable) as to its qualified status
under the Code;
(v) no "prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, that is not
otherwise exempt under Section 408 of ERISA, has occurred with respect
to any Company Employee Plan;
(vi) there are no material claims or Legal Proceedings
pending, or, to the Knowledge of the Company, threatened (other than
routine claims for benefits), against any Company Employee Plan or
against the assets of any Company Employee Plan;
(vii) each Company Employee Plan (other than any Company
Employee Plan to be terminated prior to the time any Acquired
Corporation or any Company Affiliate becomes under common control with
Parent within the meaning of any of Sections 414(b), 414(c), 414(m) and
414(o) of the Code in accordance with this Agreement) can be amended,
terminated or otherwise discontinued after the Closing in accordance
with its terms, without material liability to Parent, the Acquired
Corporations or any Company Affiliate (other than ordinary
administration expenses);
28.
(viii) there are no audits, inquiries or Legal Proceedings
pending or, to the Knowledge of the Company, threatened by the IRS, the
United States Department of Labor or any other Governmental Body with
respect to any Company Employee Plan;
(ix) none of the Acquired Corporations nor any Company
Affiliate has ever incurred any penalty or tax with respect to any
Company Employee Plan under Section 502(i) of ERISA or Sections 4975
through 4980 of the Code; and
(x) each of the Acquired Corporations and Company Affiliates
has made all contributions and other payments required by the terms of
each Company Employee Plan.
(h) From January 1, 2000 through the date of this Agreement, none of
the Acquired Corporations has maintained, established, sponsored, participated
in or contributed to (1) any Company Employee Plan that would constitute a
"defined benefit plan" within the meaning of Section 3(35) of ERISA, (2) any
Company Employee Plan qualified under Section 401(a) of the Code in which
capital stock of any Acquired Corporation or any Company Affiliate is or was
held as a plan asset or (3) any Foreign Plan.
(i) As of the date of this Agreement, no Company Employee Plan provides
(except at no cost to the Acquired Corporations or any Company Affiliate), or
reflects or represents any liability of any of the Acquired Corporations or any
Company Affiliate to provide, retiree life insurance, retiree health benefits or
other retiree employee welfare benefits to any Person for any reason, except as
may be required by COBRA or other applicable Legal Requirements. Other than
commitments made that involve no material future costs to any of the Acquired
Corporations or any Company Affiliate, as of the date of this Agreement, none of
the Acquired Corporations nor any Company Affiliate has represented, promised or
committed (whether in oral or written form) to any Company Employee (either
individually or to Company Employees as a group) or any other Person that any
Company Employee or other Person would be provided with retiree life insurance,
retiree health benefit or other retiree employee welfare benefits, except to the
extent required by applicable Legal Requirements.
(j) Except as expressly required or provided by this Agreement, neither
(i) the execution, delivery or performance of this Agreement nor (ii) the
acquisition of or payment for any shares of Company Common Stock by Acquisition
Sub pursuant to the Offer or the consummation of the Merger or any of the other
transactions contemplated by this Agreement will (either alone or in combination
with any termination of employment or any other event or circumstance)
constitute an event under any Company Employee Plan, Company Employee Agreement,
trust or loan that may result (either alone or in connection with any other
circumstance or event) in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any Company Employee.
(k) Each of the Acquired Corporations and Company Affiliates: (i) is as
of the date of this Agreement and at all times from January 1, 2000 through the
date of this Agreement has been in substantial compliance with all applicable
Legal Requirements with
29.
respect to employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to Company Employees, including
the health care continuation requirements of COBRA, the requirements of FMLA,
the requirements of HIPAA and the requirements of any similar provisions of
state law; (ii) has withheld and reported all amounts required by applicable
Legal Requirements or by Contract to be withheld and reported with respect to
wages, salaries and other payments to Company Employees; (iii) is not liable for
any arrears of wages or any taxes or any penalty for failure to comply with the
Legal Requirements applicable to the foregoing; and (iv) is not liable for any
payment to any trust or other fund governed by or maintained by or on behalf of
any Governmental Body with respect to unemployment compensation benefits, social
security or other benefits or obligations for Company Employees (other than
routine payments to be made in the normal course of business and consistent with
past practice). There are no pending or, to the Knowledge of the Company,
threatened claims or Legal Proceedings against any of the Acquired Corporations
or any Company Affiliate under any workers' compensation policy or long-term
disability policy.
3.17 ENVIRONMENTAL MATTERS. As of the date of this Agreement, each of
the Acquired Corporations (i) is in compliance in all material respects with
all, and is not subject to any material liability under any, applicable material
Environmental Laws, and (ii) possesses all material permits and other material
Governmental Authorizations required under applicable material Environmental
Laws, and is in compliance in all material respects with the terms and
conditions thereof. (For purposes of this Section 3.17: (A) "Environmental Law"
means any federal, state, local or foreign Legal Requirement relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata), including
any law or regulation relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern; and (B) "Materials
of Environmental Concern" means chemicals, radioactive compounds, infectious
disease agents, pollutants, contaminants, wastes, toxic substances, petroleum
and petroleum products and any other substance that is regulated by any
Environmental Law.)
3.18 INSURANCE. The Company has made available to Parent copies of all
material insurance policies and all material self insurance programs and
arrangements relating to the business, assets and operations of the Acquired
Corporations. As of the date of this Agreement, each of such insurance policies
is in full force and effect. From January 1, 2000 through the date of this
Agreement, none of the Acquired Corporations has received any written notice
regarding any actual or threatened (a) cancellation or invalidation of any
insurance policy, (b) refusal of any coverage or rejection of any material claim
under any insurance policy, or (c) material adjustment in the amount of the
premiums payable with respect to any insurance policy.
30.
3.19 LEGAL PROCEEDINGS; ORDERS.
(a) As of the date of this Agreement, there is no pending Legal
Proceeding, and (to the Knowledge of the Company) no Person has threatened to
commence any Legal Proceeding: (i) that involves any of the Acquired
Corporations or any of the assets owned or used by any of the Acquired
Corporations, except as otherwise would not have a material adverse effect on
the Acquired Corporations taken as a whole; or (ii) that challenges, or that may
have the effect of preventing, delaying, making illegal or otherwise materially
interfering with, the Offer, the Merger or any of the other transactions
contemplated by this Agreement.
(b) As of the date of this Agreement, there is no order, writ,
injunction, judgment or decree applicable to any of the Acquired Corporations by
name, or specifically applicable to any of the assets owned or used by any of
the Acquired Corporations, that has not been fully performed or satisfied.
3.20 AUTHORITY; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES; BINDING
NATURE OF AGREEMENT. Subject in the case of the Merger to the adoption of this
Agreement by the holders of the Company Common Stock (if necessary), the Company
has the corporate right, power and authority to enter into and to perform its
obligations under this Agreement and the Financing Documents. The board of
directors of the Company (at a meeting duly called and held) has, (a) determined
that this Agreement and the transactions contemplated by this Agreement,
including the Offer and the Merger, are in the best interests of the Company's
stockholders, (b) approved and adopted this Agreement and the transactions
contemplated by this Agreement, including the Offer and the Merger, in
accordance with the requirements of the DGCL, (c) declared that this Agreement
is advisable, (d) resolved to recommend that the stockholders of the Company
accept the Offer and tender their shares of Company Common Stock pursuant to the
Offer and (if required by applicable law) adopt this Agreement and approve the
Merger, and (e) to the extent necessary, adopted a resolution for the purpose of
causing the Company not to be subject to any state takeover law or similar Legal
Requirement that might otherwise apply to this Agreement, any of the Stockholder
Agreements, any of the Financing Documents, the Offer, the Merger or any of the
other transactions contemplated by this Agreement, any of the Stockholder
Agreements or any of the Financing Documents. This Agreement and the Financing
Documents constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
3.21 SECTION 203 OF THE DGCL NOT APPLICABLE. As of the date hereof and
at all times on or prior to the Effective Time, the board of directors of the
Company has and will take all actions necessary to ensure that the restrictions
applicable to business combinations contained in Section 203 of the DGCL are
not, and will not be, applicable to the execution, delivery or performance of
this Agreement or any of the Stockholder Agreements or the purchase of or
payment for shares of Company Common Stock pursuant to the Offer, or to the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or any of the Stockholder Agreements or any of the Financing
Documents. Prior to the execution of the Stockholder Agreements, the board of
directors of the Company approved the Stockholder Agreements and the
transactions contemplated thereby.
31.
3.22 INTENT TO TENDER; VOTE REQUIRED. As of the date of this Agreement,
the Company has been advised and believes in good faith that all of its
directors and executive officers currently intend to tender all of their shares
of Company Common Stock pursuant to the Offer. If required under applicable
Legal Requirements, the affirmative vote of the holders of a majority of the
shares of Company Common Stock outstanding on the record date for the Company
Stockholders' Meeting (the "Required Company Stockholder Vote") is the only vote
of the holders of any class or series of the Company's capital stock necessary
to adopt this Agreement, approve the Merger or consummate any of the other
transactions contemplated by this Agreement.
3.23 NON-CONTRAVENTION; CONSENTS. Subject in the case of the Merger to
the adoption of this Agreement by the holders of the Company Common Stock (if
necessary), and subject to the introductory clauses of the following sentence,
and except as otherwise would not have a material adverse effect on the Acquired
Corporations taken as a whole, neither (1) the execution, delivery or
performance of this Agreement or any of the Financing Documents, nor (2) the
acquisition by Acquisition Sub of any shares of Company Common Stock pursuant to
the Offer or the consummation of the Merger or any of the other transactions
contemplated by this Agreement or the Financing Documents, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene or otherwise violate (i) any of the provisions
of the certificate of incorporation, bylaws or other charter or
organizational documents of any of the Acquired Corporations, or (ii)
any applicable resolution adopted by the stockholders, the board of
directors or any committee of the board of directors of any of the
Acquired Corporations;
(b) contravene or otherwise violate any Legal Requirement or
any order, writ, injunction, judgment or decree to which any of the
Acquired Corporations, or any of the assets owned or used by any of the
Acquired Corporations, is subject;
(c) contravene or otherwise violate any of the terms or
requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any material
Governmental Authorization that is held by any of the Acquired
Corporations or that otherwise relates to the business of any of the
Acquired Corporations or to any of the assets owned or used by any of
the Acquired Corporations;
(d) contravene or otherwise violate or breach, or result in a
default under, any provision of any Material Contract, or give any
Person the right to (i) declare a default or exercise any remedy under
any Material Contract or (ii) cancel, terminate or modify any term of
any Material Contract;
(e) result in the imposition or creation of any material
Encumbrance upon or with respect to any material asset owned or used by
any of the Acquired Corporations (except for liens that will not, in
any case or in the aggregate, materially detract from the value of the
assets subject thereto or materially impair the operations of any of
the Acquired Corporations); or
32.
(f) result in the transfer of any material asset of any of the
Acquired Corporations to any Person.
Subject in the case of the Merger to the adoption of this Agreement by the
holders of the Company Common Stock (if necessary), except as may be required by
the Exchange Act, the DGCL, the HSR Act, any foreign antitrust law or regulation
and the NASD Bylaws (as they relate to the Proxy Statement), none of the
Acquired Corporations was, is or will be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
(x) the execution, delivery or performance of this Agreement, any of the
Stockholder Agreements or any of the Financing Documents, (y) the acquisition of
or payment for any shares of Company Common Stock by Acquisition Sub pursuant to
the Offer or (z) the consummation of the Merger or any of the other transactions
contemplated by this Agreement, any of the Stockholder Agreements or any of the
Financing Documents.
3.24 FAIRNESS OPINION. The Company's board of directors has received
the written opinion of Banc of America Securities, LLC, financial advisor to the
Company, dated the date of this Agreement, to the effect that the Offer Price is
fair to the stockholders of the Company from a financial point of view. The
Company has furnished an accurate and complete copy of said written opinion to
Parent.
3.25 FINANCIAL ADVISOR. Except for Banc of America Securities, LLC, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Offer, the Merger or any of the
other transactions contemplated by this Agreement or any of the Financing
Documents based upon arrangements made by or on behalf of any of the Acquired
Corporations. The Company has furnished to Parent accurate and complete copies
of all agreements under which any such fees, commissions or other amounts have
been paid to or may become payable and all indemnification and other agreements
related to the engagement of Banc of America Securities, LLC.
3.26 COMPANY RIGHTS AGREEMENT. The Company has amended the Company
Rights Agreement to provide that: (a)(i) neither Parent nor Acquisition Sub, nor
any affiliate of Parent or Acquisition Sub, shall be deemed to be an Acquiring
Person (as defined in the Company Rights Agreement), (ii) no Distribution Date
(as defined in the Company Rights Agreement), Triggering Event (as defined in
the Company Rights Agreement) or Shares Acquisition Date (as defined in the
Company Rights Agreement) shall be deemed to occur and (iii) the Rights will not
separate from the Company Common Stock, in the case of each of clauses "(i),"
"(ii)" or "(iii)," as a result of the execution, delivery or performance of this
Agreement, the Stockholder Agreements, the Financing Documents or the purchase
of or payment for shares of Company Common Stock pursuant to the Offer, or the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or thereby or the public announcement of the execution and delivery of
this Agreement, the Stockholder Agreements or the Financing Documents; (b) the
moment in time immediately prior to the Effective Time shall be the "Final
Expiration Date" (as defined in the Company Rights Agreement); and (c) none of
the Company, Parent, Acquisition Sub or the Surviving Corporation, nor any of
their respective affiliates, shall have any obligations under the Company Rights
Agreement to any holder (or former holder) of Rights as of or following the
Effective Time.
33.
3.27 FULL DISCLOSURE. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the Offer Documents or the Schedule 14D-9 will, at the time the
Offer Documents and the Schedule 14D-9 are mailed to the stockholders of the
Company or at any time between the time the Offer Documents and the Schedule
14D-9 are mailed to the stockholders of the Company and the Acceptance Date,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB
Parent and Acquisition Sub represent and warrant to the Company as
follows:
4.1 VALID EXISTENCE. Parent and Acquisition Sub are corporations duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
4.2 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Acquisition Sub
have the corporate right, power and authority to enter into and to perform their
obligations under this Agreement and the Financing Documents. The execution,
delivery and performance by Parent and Acquisition Sub of this Agreement and the
Financing Documents have been duly authorized by all necessary action on the
part of Parent and Acquisition Sub and their respective boards of directors.
This Agreement and the Financing Documents constitute the legal, valid and
binding obligations of Parent and Acquisition Sub, enforceable against them in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
4.3 NON-CONTRAVENTION; CONSENTS. Neither the execution and delivery of
this Agreement by Parent and Acquisition Sub nor the acquisition of or payment
for any shares of Company Common Stock by Acquisition Sub pursuant to the Offer
or the consummation of the Merger or any of the other transactions contemplated
by this Agreement will (a) contravene, conflict with or result in a violation of
any breach of any provisions of the certificate of incorporation or bylaws of
Parent or Acquisition Sub, (b) result in a default by Parent or Acquisition Sub
under any material Contract to which Parent or Acquisition Sub is a party or (c)
contravene, conflict with or result in a material violation by Parent or
Acquisition Sub of any Legal Requirement, order, writ, injunction, judgment or
decree to which Parent or Acquisition Sub is subject.
4.4 DISCLOSURE. None of the information supplied or to be supplied by
or on behalf of Parent for inclusion in the Offer Documents will, at the time
the Offer Documents are mailed to the stockholders of the Company or at any time
between the time the Offer Documents are mailed to the stockholders of the
Company and the Acceptance Date, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. None of the information supplied by Parent
or Acquisition Sub to the Company for inclusion in the Schedule 14D-9 pursuant
to Section 1.3(b) shall, at the time of the filing with the SEC of the Schedule
14D-9, contain any untrue statement of a material fact or
34.
omit to state any material fact required to be stated therein or necessary in
order that the statements made therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by or on behalf of Parent for inclusion in the Proxy Statement will, at
the time the Proxy Statement is filed with the SEC or at the time the Proxy
Statement is mailed to the stockholders of the Company or (including any
corrections or modifications made by Parent or Acquisition Sub to such
information) at the time of the Company Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading.
4.5 FORECASTS, ETC. Neither Parent nor Acquisition Sub has relied on
any financial forecast, revenue projection, or financial model made available by
the Company to Parent or its Representatives, it being understood that Parent
and Merger Sub are solely responsible for developing for themselves, together
with their Representatives, any such financial information concerning the
Company or its business for or in connection with the transactions contemplated
by this Agreement.
4.6 SUFFICIENT FUNDS. Parent and Acquisition Sub have and will have
sufficient funds to enable them to consummate the transactions contemplated by
this Agreement in accordance with the terms of this Agreement and the payment of
all fees and expenses incurred by Parent and Acquisition Sub in connection with
such transactions.
4.7 FINANCIAL ADVISOR. Except for Xxxxxxx Xxxxx & Co., no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Offer, the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Acquisition Sub.
SECTION 5. CERTAIN COVENANTS OF THE COMPANY
5.1 ACCESS AND INVESTIGATION.
(a) During the period from the date of this Agreement through the
Effective Time (the "Pre-Closing Period") and subject to applicable Legal
Requirements, the Company shall, and shall cause the respective Representatives
of the Acquired Corporations to: (a) provide Parent and Parent's Representatives
with reasonable access during normal business hours to the Acquired
Corporations' Representatives, personnel, facilities and assets and to all
existing books, records, Tax Returns, work papers and other documents and
information relating to the Acquired Corporations (it being understood that such
access will be coordinated through the Company's General Counsel or any
individual designated by the Company's General Counsel); and (b) provide Parent
and Parent's Representatives with such copies of the existing books, records,
Tax Returns, work papers and other documents and information relating to the
Acquired Corporations as Parent may reasonably request. Without limiting the
generality of the foregoing, during the Pre-Closing Period, the Company shall
promptly provide to Parent (at the Company's reasonable election) either copies
of or access to:
(i) all material operating and financial reports prepared by
the Acquired Corporations for the Company's senior management,
including (A) copies of
35.
the unaudited monthly consolidated balance sheets of the Acquired
Corporations and the related unaudited monthly consolidated statements
of operations, statements of stockholders' equity and statements of
cash flows and (B) copies of any development plans, write-off reports,
hiring reports and capital expenditure reports prepared for the
Company's senior management;
(ii) any written materials or communications sent by or on
behalf of the Company to its stockholders;
(iii) any material notice, document or other communication
sent by or on behalf of any of the Acquired Corporations to any party
to any Material Contract or sent to any of the Acquired Corporations by
any party to any Material Contract (other than any communication that
relates solely to routine commercial transactions between an Acquired
Corporation and the other party to any such Material Contract and that
is of the type sent in the ordinary course of business and consistent
with past practices);
(iv) any notice, report or other document filed with or sent
to any Governmental Body on behalf of any of the Acquired Corporations
in connection with the Offer, the Merger or any of the other
transactions contemplated by this Agreement;
(v) any (i) material notice, report, correspondence, action,
document or other communication received by any of the Acquired
Corporations or (to the Knowledge of the Company) any Company Partner
from, or sent on behalf of any of the Acquired Corporations or (to the
Knowledge of the Company) any Company Partner to, the FDA or any other
similar Governmental Body relating to the clinical or regulatory status
of any Company Pharmaceutical Product or (ii) material notice, report
or other document received by any of the Acquired Corporations from, or
sent on behalf of any of the Acquired Corporations to, any other
Governmental Body;
(vi) promptly after it is available, access to a copy of the
MAA (as defined in Section 5.2(c)(ii)) and the Coviracil NDA;
(vii) any order or proposed order for any Company
Pharmaceutical Product (whether in bulk active pharmaceutical or
finished product form), placed by any of the Acquired Corporations with
Xxxxxx or any other Person; and
(viii) for each Company Pharmaceutical Product, all master and
executed clinical and commercial batch production records for
manufacturing thereof in bulk active pharmaceutical and finished
product form.
(b) Without limiting the generality of anything contained in Section
5.2(a), during the Pre-Closing Period, the Company shall ensure that its
officers confer and consult with Parent and Parent's Representatives on a
reasonable, periodic basis concerning operational, financial, regulatory,
intellectual property, manufacturing and clinical matters and otherwise report
regularly to Parent concerning the status of the business of the Acquired
Corporations.
36.
(c) The Company shall use reasonable efforts to enable Parent to meet
with Representatives of Emory University for the purpose of obtaining
information regarding the relationships between the Acquired Corporations and
Emory University.
5.2 OPERATION OF THE COMPANY'S BUSINESS.
(a) Except as otherwise expressly permitted under this Agreement or as
specified in the Company Disclosure Schedule, as required by the Financing
Documents or as reasonably necessary to comply with applicable Legal
Requirements, during the Pre-Closing Period: (i) the Company shall use
reasonable efforts to ensure that each of the Acquired Corporations (A) conducts
its business and operations in the ordinary course and in accordance with past
practices, and (B) preserves intact its current business organization, keeps
available the services of its current officers and employees and maintains its
relations and goodwill with all suppliers, customers, Producers, Company
Partners, strategic partners, landlords, creditors, licensors, licensees,
employees and other Persons having business relationships with the respective
Acquired Corporations, other than where the failure to maintain such relations
and goodwill is commercially reasonable and is not reasonably likely to have an
effect on the Acquired Corporations of a magnitude in excess of $50,000
(individually), or where the Company receives Parent's prior written approval;
(ii) the Company shall use commercially reasonable efforts to ensure that each
of the Acquired Corporations conducts its business and operations in compliance
in all material respects with all applicable Legal Requirements and the
requirements of all Material Contracts; (iii) the Company shall use commercially
reasonable efforts to keep in full force all insurance policies referred to in
Section 3.18 or comparable replacements, except where the Company receives
Parent's prior written approval; and (iv) the Company shall promptly notify
Parent of (A) any written notice (or other communication known to the Company)
received from any Person alleging that the Consent of such Person is or may be
required in connection with any of the transactions contemplated by this
Agreement, and (B) any material Legal Proceeding commenced or, to the Knowledge
of the Company, threatened against, relating to or involving or otherwise
affecting any of the Acquired Corporations.
(b) During the Pre-Closing Period, the Company shall use commercially
reasonable efforts to (i) effectuate the transfer from Xxxxxx to Yuhan (or with
the consent of Parent not to be unreasonably withheld, another third party) of
the technology necessary to manufacture Bulk Emtricitabine in accordance with
Exhibit 18 of the Xxxxxx Agreement and in accordance with the plans, procedures,
requirements and timetable set forth in Schedule 5.2(b)(i) and (ii) effectuate
the transfer from Xxxxxx to a third-party contract manufacturer of the
technology necessary to formulate Finished Emtricitabine from Bulk Emtricitabine
as promptly as reasonably practicable.
(c) During the Pre-Closing Period, the Company shall use commercially
reasonable efforts to: (i) prosecute and secure the approval by the FDA of the
Coviracil NDA; and (ii) file with the European Medicines Evaluation Agency (the
"EMEA"), and prosecute and secure approval by the EMEA of, a Marketing
Authorisation Application for marketing approval of Coviracil in the European
Union (the "MAA").
(d) During the Pre-Closing Period, the Company shall (i) consult with
Parent in connection with any proposed meeting with the FDA or any other
Governmental Body
37.
relating to any Company Pharmaceutical Product and promptly provide Parent with
a summary report of any such meeting that occurs and (ii) provide Parent and its
Representatives with a reasonable opportunity to review any filing made on or
after December 11, 2002 and any correspondence or other material communication,
proposed to be submitted or otherwise transmitted to the FDA or any other
Governmental Body on behalf of any of the Acquired Corporations relating to any
Company Pharmaceutical Product.
(e) During the Pre-Closing Period, the Company shall (i) make and keep
Parent reasonably informed of the Company's plans and arrangements to obtain and
maintain the quantities of Bulk Emtricitabine and Finished Emtricitabine and
related raw materials and components, and (ii) use commercially reasonable
efforts to obtain and maintain on a commercially reasonable basis quantities of
Bulk Emtricitabine and Finished Emtricitabine and related raw materials and
components that the Company reasonably expects to be required by the Acquired
Corporations to make sales of Coviracil for one year.
(f) During the Pre-Closing Period, except as otherwise expressly
permitted or required by this Agreement or the Financing Documents, without the
prior written consent of Parent, the Company shall not, and shall not permit
either of its Subsidiaries to:
(i) declare, accrue, set aside or pay any dividend or make any
other distribution in respect of any shares of capital stock, or
repurchase, redeem or otherwise reacquire any shares of capital stock
or other securities;
(ii) sell, issue, grant or authorize the issuance or grant of
(A) any capital stock or other security, (B) any option, call, warrant
or right to acquire any capital stock or other security, or (C) any
instrument convertible into or exchangeable for any capital stock or
other security (except that (1) the Company may issue shares of Company
Common Stock (x) upon the valid exercise of Company Options outstanding
as of the date of this Agreement or issued in a manner permitted by
this Agreement, and (y) pursuant to the ESPP, and (2) the Company may
(x) in the ordinary course of business grant options in 2002 to
purchase no more than a total of 2,500,000 shares of Company Common
Stock in the aggregate pursuant to the Company Option Plan, and (y) in
the ordinary course of business and consistent with past practices
grant options to purchase no more than 200,000 shares of Company Common
Stock in the aggregate in each calendar month in 2003 prior to the
Acceptance Date pursuant to the Company Stock Option Plan; provided
that such options (1) are issued only to employees of the Company and
(2) have an exercise price equal to the fair market value of the
Company Common Stock covered by such options as of the time of grant of
such options;
(iii) except as may be required by applicable Legal
Requirements, amend or waive any of its rights under, or alter the
acceleration of vesting under, any provision of the Company Option
Plan, the CEO Incentive Plan, any provision of any agreement evidencing
any outstanding Company Option or any restricted stock purchase
agreement, or otherwise modify any of the terms of any outstanding
option, warrant or other security or any related Contract;
38.
(iv) amend or terminate the Company Rights Agreement or amend
or permit the adoption of any amendment to its certificate of
incorporation or bylaws or other charter or organizational documents,
or effect or become a party to any merger, consolidation, share
exchange, business combination, amalgamation, recapitalization,
reclassification of shares, stock split, reverse stock split, division
or subdivision of shares, consolidation of shares or similar
transaction;
(v) form any Subsidiary or acquire any equity interest or
other interest in any other Entity;
(vi) make any capital expenditure (except that the Acquired
Corporations may make capital expenditures that, when added to all
other capital expenditures made on behalf of the Acquired Corporations
during the Pre-Closing Period, do not exceed $2,200,000 in the
aggregate);
(vii) except as otherwise expressly permitted by this Section
5.2, enter into or become bound by, or permit any of the material
assets owned or used by it to become bound by, any Material Contract,
or amend or terminate, or waive or exercise any material right or
remedy under, any Material Contract, in each case other than in the
ordinary course of business consistent with past practices;
(viii) acquire, lease or license any right or other asset from
any other Person or sell or otherwise dispose of, or lease or license,
any right or other asset to any other Person (except in each case for
assets acquired, leased, licensed or disposed of by the Company in the
ordinary course of business and consistent with past practices or for
non-exclusive licenses to other Persons granted only for research or to
enable third parties to render services for the Acquired Corporations),
or waive or relinquish any material right;
(ix) commence, sponsor, participate in, or provide funding for
any clinical trial except those trials being conducted as of the date
of this Agreement or for which the Company has a written protocol
proposal as of the date of this Agreement;
(x) place, cancel or modify any order for any Company
Pharmaceutical Product (in bulk active pharmaceutical or finished
product form) other than the placement of orders that are reasonably
necessary for the Company to comply with its obligations under Section
5.2(e)(ii) to maintain adequate and suitable quantities of Company
Pharmaceutical Product to conduct trials permitted by Section
5.2(f)(ix);
(xi) enter into any Contract covering multiple manufacturing
"campaigns" or any Contract with a term of more than 270 days, in each
case for manufacture of any Company Pharmaceutical Product (in bulk
active pharmaceutical or finished product form) or any raw material
relating to such manufacture, that cannot be terminated (without
penalty) within 60 days after delivery of a termination notice by the
Company;
39.
(xii) other than in the ordinary course of business consistent
with past practices, write off as uncollectible, or establish any
extraordinary reserve with respect to, any receivable or other
indebtedness;
(xiii) make any pledge of any of its assets or permit any of
its material assets to become subject to any Encumbrances other than
Encumbrances of the type described in Section 3.6(1) and (2);
(xiv) lend money to any Person, or incur or guarantee any
indebtedness (except that the Company may make routine borrowings and
advancement of expenses in the ordinary course of business and in
accordance with past practices);
(xv) except as may be required by applicable Legal
Requirements, adopt, establish, enter into or amend any employee
benefit plan, pay any bonus or make any profit-sharing or similar
payment to, or increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any
of its directors, officers or employees (except that the Company (A)
may make routine, reasonable salary increases in connection with the
Company's customary employee review process, and (B) may pay customary
bonus payments and profit sharing payments consistent with past
practices payable in accordance with existing bonus and profit sharing
plans referred to in Part 3.16(g) of the Company Disclosure Schedule);
(xvi) hire any employee or promote any employee (except that
the Company may hire or promote any employee in order to fill a
necessary position vacated after the date of this Agreement if the
Company has provided Parent with notice of the Company's intent to hire
or promote such employee at least ten days prior to the hiring or
promotion of such employee);
(xvii) except as may be required by applicable Legal
Requirements, change in any material respect any of its personnel
policies or other business policies, or any of its methods of
accounting or accounting practices in any material respect;
(xviii) make any material Tax election;
(xix) commence (except to the extent reasonably necessary to
avoid the actual or potential loss of any material legal right of the
Acquired Corporations) or settle any Legal Proceeding; or
(xx) agree, commit or offer to take any of the actions
described in clauses "(i)" through "(xix)" of this Section 5.2(f).
(g) During the Pre-Closing Period, the Acquired Corporations shall use
commercially reasonable efforts to maintain adequate and suitable quantities of
Emtricitabine, Amdoxovir and Clevudine in bulk active pharmaceutical and
finished product form for the conduct of all clinical trials being conducted by
or on behalf of any of the Acquired Corporations.
40.
(h) During the Pre-Closing Period, the Company shall not willfully
conceal from Parent: (i) its Knowledge of any material inaccuracy in any
representation or warranty made by the Company in this Agreement as of the date
hereof; (ii) its Knowledge of any material breach of any covenant or obligation
of the Company hereunder; or (iii) if Acquisition Sub shall not yet have
accepted for payment any shares of Company Common Stock pursuant to the Offer,
the Company's Knowledge of an event, condition, fact or circumstance that the
Company Knows makes the timely satisfaction of any of the Offer Conditions
impossible. Without limiting the generality of the foregoing, the Company shall
promptly advise Parent in writing of any Legal Proceeding or material claim
threatened in writing or commenced against or with respect to any Acquired
Corporation. No notifications given to Parent pursuant to this Section 5.2(h)
shall limit or otherwise affect any of the representations, warranties,
covenants or obligations of the Company contained in this Agreement or
constitute an admission by the Company that any such material inaccuracy or
breach has actually occurred. For the avoidance of doubt, the events in clauses
"(i) - (iii)" above, respectively, are Knowledge of each inaccuracy, breach or
impossibility, not just knowledge of the underlying facts giving rise thereto.
5.3 NO SOLICITATION.
(a) The Company shall not directly or indirectly, and shall not
authorize or permit either of its Subsidiaries or any Representative of any of
the Acquired Corporations directly or indirectly to, (i) solicit, initiate,
intentionally encourage, intentionally induce or intentionally facilitate the
making, submission or announcement of any Acquisition Proposal (whether by
amending, or granting any waiver under, the Company Rights Agreement or
otherwise) or take any action that would reasonably be expected to lead to an
Acquisition Proposal, (ii) furnish any information regarding any of the Acquired
Corporations to any Person in connection with or in response to an Acquisition
Proposal or an inquiry or indication of interest that would reasonably be
expected to lead to an Acquisition Proposal, (iii) engage in discussions or
negotiations with any Person with respect to any Acquisition Proposal, (iv)
approve, endorse or recommend any Acquisition Proposal or (v) enter into any
letter of intent or similar document or any Contract contemplating or otherwise
relating to any Acquisition Transaction; PROVIDED, HOWEVER, that prior to the
Acceptance Date (and subject to the Company's right to terminate this Agreement
pursuant to Section 8.1(h)), this Section 5.3(a) shall not prohibit the Company
from furnishing information regarding the Acquired Corporations to, or entering
into discussions or negotiations with, any Person in response to a Superior
Offer that is submitted to the Company by such Person (and not withdrawn) if (1)
such Superior Offer shall not have resulted directly or indirectly from any
breach of this Section 5.3 or from any action taken by the Company or any of its
Representatives with the intent of circumventing any of the provisions set forth
in this Section 5.3, (2) the board of directors of the Company concludes in good
faith, after having taken into account the advice of its outside legal counsel,
that the failure to take such action would be inconsistent with the fiduciary
obligations of the Company's board of directors to the Company's stockholders
under applicable Legal Requirements, (3) at least one business day prior to
furnishing any such information to, or entering into discussions or negotiations
with, such Person, the Company gives Parent written notice of the identity of
such Person and of the Company's intention to furnish information to, or enter
into discussions or negotiations with, such Person, and the Company receives
from such Person an executed confidentiality agreement containing provisions
(including "standstill" provisions) no less
41.
favorable to the Company than the provisions contained in the Confidentiality
Agreement, and (4) at least one business day prior to furnishing any such
information to such Person, the Company furnishes such information to Parent (to
the extent such information has not been previously furnished by the Company to
Parent). Without limiting the generality of the foregoing, the Company
acknowledges and agrees that any breach by any Representative of any of the
Acquired Corporations of, or action taken by any Representative of any of the
Acquired Corporations with the intent of circumventing, any of the provisions
set forth in the preceding sentence shall be deemed to constitute a breach of
this Section 5.3 by the Company (whether or not such Representative is
purporting to act on behalf of any of the Acquired Corporations).
Notwithstanding anything to the contrary contained in this Section 5.3(a), after
March 1, 2003, the Company may enter into confidential discussions regarding
(but may not enter into any Contract regarding) a Contract Sales Arrangement (as
defined below) with a Contract Sales Organization (as defined below) if (i) such
Contract Sales Organization shall have executed and delivered to the Company a
confidentiality agreement containing provisions (including "standstill"
provisions) no less favorable to the Company than the terms of the
Confidentiality Agreement, (ii) at least five business days prior to initiating
such discussions, the Company shall have given Parent written notice of the
identity of such Contract Sales Organization and of the Company's intention to
enter into such discussions, (iii) the Company periodically provides Parent with
term sheets and draft Contracts to keep Parent reasonably informed of the status
of such discussions, and (iv) the Company otherwise keeps Parent reasonably
informed with respect to the status of such discussions. For purposes of the
preceding sentence: (1) "Contract Sales Organization" shall mean an Entity
commonly and primarily known as a "contract sales organization" that is engaged
primarily in the business of promoting products for third parties and is not,
and is not a direct or indirect affiliate of, an entity commonly and primarily
known as a "pharmaceutical", "biopharmaceutical" or "biotechnology" company; and
(2) "Contract Sales Arrangement" shall mean an arrangement (that is terminable
by the Company within three years without payment or penalty) between the
Company and a Contract Sales Organization under which such Contract Sales
Organization (A) would promote (and would only be granted such rights as are
necessary to promote) a Company Pharmaceutical Product for a fee (which may be
fixed or based upon a percentage of revenues or otherwise) but (B) would not be
granted any research, development, manufacturing, sublicensing or other rights
with respect to such Company Pharmaceutical Product or with respect to any
Intellectual Property underlying or related to such Company Pharmaceutical
Product except as necessary for the purpose of clause "(A)".
(b) The Company shall, promptly (and in no event later than 24 hours)
after receipt of any Acquisition Proposal, any inquiry or indication of interest
that would reasonably be expected to lead to an Acquisition Proposal or any
request for nonpublic information relating thereto, advise Parent orally and in
writing of such Acquisition Proposal, inquiry, indication of interest or request
(including the identity of the Person making or submitting such Acquisition
Proposal, inquiry, indication of interest or request, and the material terms
thereof) that is made or submitted by any Person prior to the Acceptance Date.
The Company shall keep Parent reasonably informed with respect to the status of
any such Acquisition Proposal, inquiry, indication of interest or request and
any modification or proposed modification thereto.
42.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal.
(d) The Company agrees not to release or permit the release of any
Person from, or to waive or permit the waiver of any provision of, any
confidentiality, "standstill" or similar agreement to which any of the Acquired
Corporations is a party or under which any of the Acquired Corporations has any
rights, and will use its best efforts to enforce or cause to be enforced each
such agreement at the request of Parent. The Company also will promptly request
each Person that has executed, on or after January 1, 2002, a confidentiality
agreement in connection with its consideration of a possible Acquisition
Transaction or a possible acquisition of securities of the Company to return all
confidential information heretofore furnished to such Person by or on behalf of
any of the Acquired Corporations.
(e) Nothing in this Section 5.3 or elsewhere in this Agreement shall
prohibit the Company from (i) filing with the SEC a report on Form 8-K with
respect to this Agreement, including a copy of this Agreement and any related
agreement as exhibits to such report or (ii) taking and disclosing to its
stockholders a position contemplated by Rule 14d-9, Rule 14e-2(a) or Item
1012(a) of Regulation M-A under the Exchange Act with regard to an Acquisition
Proposal or (subject to Parent's rights under Section 8.1(g)) making any other
disclosure to the Company's stockholders if the failure to do so would result in
a violation of any applicable Legal Requirement (provided that the board of
directors of the Company shall not be permitted to withdraw or modify the
Company Board Recommendation in a manner adverse to Parent or Acquisition Sub
except as specifically provided in Section 1.2(b)).
SECTION 6. ADDITIONAL COVENANTS OF THE PARTIES
6.1 STOCKHOLDER APPROVAL; PROXY STATEMENT.
(a) As promptly as practicable following the Acceptance Date (and
following the expiration of any subsequent offering period), if the adoption of
this Agreement by the Company's stockholders is required by law in order to
consummate the Merger, the Company, acting through the Post-Acceptance Board,
shall take all action necessary under all applicable Legal Requirements to call,
give notice of and hold a meeting of the holders of Company Common Stock to vote
on the adoption of this Agreement (the "Company Stockholders' Meeting"). The
Company shall ensure that all proxies solicited in connection with the Company
Stockholders' Meeting are solicited in compliance with all applicable Legal
Requirements.
(b) As promptly as practicable following the Acceptance Date (and
following the expiration of any subsequent offering period), if the adoption of
this Agreement by the Company's stockholders is required by law in order to
consummate the Merger, the Company shall prepare and file with the SEC the Proxy
Statement and shall use reasonable efforts to respond to any comments of the SEC
or its staff and to cause the Proxy Statement to be mailed to the Company's
stockholders, as promptly as practicable. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for any amendment or supplement to the Proxy
Statement or for additional information, and will supply Parent with copies of
all correspondence between the Company or
43.
any of its Representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Proxy Statement. The Company shall give Parent
an opportunity to comment on any correspondence with the SEC or its staff or any
proposed material to be included in the Proxy Statement prior to transmission to
the SEC or its staff and shall not transmit any such material to which Parent
reasonably objects. If at any time prior to the Company Stockholders' Meeting
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare such an
amendment or supplement and, after obtaining the consent of Parent to such
amendment or supplement, shall promptly transmit such amendment or supplement to
the Company's stockholders. Parent shall furnish to the Company such information
concerning itself and Acquisition Sub for inclusion in the Proxy Statement as
may be requested by the Company and required to be included in the Proxy
Statement under applicable Legal Requirements.
(c) Notwithstanding anything to the contrary contained in this
Agreement, if Acquisition Sub shall own, by virtue of the Offer or otherwise, at
least 90% of the outstanding shares of Company Common Stock, the parties shall
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable without a stockholders' meeting in accordance
with Section 253 of the DGCL.
(d) Parent agrees to cause all shares of Company Common Stock owned by
Parent or any subsidiary of Parent to be voted in favor of the adoption of the
Agreement and consummation of the Merger at the Company Stockholders' Meeting.
6.2 REGULATORY APPROVALS. Each party shall use reasonable efforts to
file, as soon as practicable after the date of this Agreement, all notices,
reports and other documents required to be filed by such party with any
Governmental Body with respect to the Offer, the Merger and the other
transactions contemplated by this Agreement, and to submit promptly any
additional information requested by any such Governmental Body. Without limiting
the generality of the foregoing, the Company and Parent shall, promptly after
the date of this Agreement, prepare and file the notifications required under
the HSR Act and any applicable foreign antitrust laws or regulations in
connection with the Offer, the Merger or the other transactions contemplated by
this Agreement. The Company and Parent shall respond as promptly as practicable
to (i) any inquiries or requests received from the Federal Trade Commission or
the Department of Justice for additional information or documentation and (ii)
any inquiries or requests received from any state attorney general, foreign
antitrust authority or other Governmental Body in connection with antitrust or
related matters. Each of the Company and Parent shall (1) give the other party
prompt notice of the commencement or threat of commencement of any Legal
Proceeding by or before any Governmental Body with respect to the Offer, the
Merger or any of the other transactions contemplated by this Agreement, (2) keep
the other party informed as to the status of any such Legal Proceeding or
threat, and (3) promptly inform the other party of any communication to or from
the Federal Trade Commission, the Department of Justice or any other
Governmental Body regarding the Offer, the Merger or any of the other
transactions contemplated by this Agreement. Except as may be prohibited by any
Governmental Body or by any Legal Requirement, (a) the Company and Parent will
consult and cooperate with one another, and will consider in good faith the
views of one another, in connection with any analysis, appearance, presentation,
memorandum, brief, argument, opinion or proposal made or submitted in connection
with any Legal Proceeding under or relating to the
44.
HSR Act or any other foreign, federal or state antitrust or fair trade law, and
(b) in connection with any such Legal Proceeding, each of the Company and Parent
will permit authorized Representatives of the other party to be present at each
meeting or conference relating to any such Legal Proceeding and to have access
to and be consulted in connection with any document, opinion or proposal made or
submitted to any Governmental Body in connection with any such Legal Proceeding.
At the request of Parent, the Company shall agree to divest, sell, license,
dispose of, hold separate or otherwise take or commit to take any action that
limits the ability of any of the Acquired Corporations to operate or retain any
of the businesses, product lines or assets of any of the Acquired Corporations,
provided that any such action is conditioned upon the consummation of the
transactions contemplated by this Agreement.
6.3 STOCK OPTIONS; ESPP.
(a) At the Effective Time, Parent shall cause any Company Option that
is outstanding and unexercised immediately prior to the Effective Time, whether
or not vested and whether or not the exercise price of such Company Option is in
excess of the Offer Price, to become an option to purchase Parent Common Stock
by assuming such Company Option in accordance with, and to the extent permitted
by, the terms (as in effect as of the date of this Agreement) of the stock
incentive plan under which such Company Option was issued and the terms of the
stock option agreement by which such Company Option is evidenced. From and after
the Effective Time, (i) each Company Option assumed by Parent may be exercised
solely for shares of Parent Common Stock, (ii) the number of shares of Parent
Common Stock subject to each Company Option assumed by Parent shall be equal to
the number of shares of Company Common Stock subject to such Company Option
immediately prior to the Effective Time multiplied by the Conversion Ratio (as
defined below), rounding down to the nearest whole share, (iii) the per share
exercise price under each Company Option assumed by Parent shall be adjusted by
dividing the per share exercise price under such Company Option by the
Conversion Ratio and rounding up to the nearest whole cent, and (iv) any
restriction on the exercise of any Company Option assumed by Parent shall
continue in full force and effect and the term, exercisability, vesting schedule
and other provisions of such Company Option shall otherwise remain unchanged
(subject to any change in such Company Option triggered by the transactions
contemplated by this Agreement under the express terms (as in effect on the date
of this Agreement) of the stock incentive plan under which such Company Option
was issued and the terms of the stock option agreement by which such Company
Option is evidenced); PROVIDED, HOWEVER, that each Company Option assumed by
Parent in accordance with this Section 6.3(a) shall, in accordance with its
terms, be subject to further adjustment as appropriate to reflect any stock
split, division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction subsequent to the Effective Time. Parent shall file with the SEC, no
later than 30 days after the date on which the Merger becomes effective, a
registration statement on Form S-8 relating to the shares of Parent Common Stock
issuable with respect to the Company Options assumed by Parent in accordance
with this Section 6.3(a). If the assumption of any Company Option in the manner
described in this Section 6.3(a) is not permitted under the terms of the stock
incentive plan under which such Company Option was issued as construed by the
plan administrator prior to the Acceptance Date, then Parent shall not be
required to assume such Company Option in the manner described in this Section
6.3(a), and Parent shall instead be entitled to cause such Company Option to be
treated in a manner permitted by the terms of such stock incentive plan.
Notwithstanding anything to the
45.
contrary contained in this Section 6.3, in lieu of assuming an outstanding
Company Option in accordance with this Section 6.3(a), Parent may, at its
election, cause such Company Option to be replaced by issuing a reasonably
equivalent replacement stock option in substitution therefor. For purposes of
this Section 6.3(a), "Conversion Ratio" shall mean the ratio of (i) the Offer
Price to (ii) the closing price per share of Parent Common Stock on The Nasdaq
Stock Market on the trading day immediately preceding the date on which the
Merger becomes effective.
(b) Prior to the Effective Time, the Company shall take all action that
may be necessary (under each plan pursuant to which any Company Option is
outstanding and otherwise) to effectuate the provisions of this Section 6.3 and
to ensure that, from and after the Effective Time, any holder of a Company
Option has no rights with respect thereto other than those specifically provided
in this Section 6.3.
(c) As of the Effective Time, the ESPP shall be terminated. The rights
of participants in the ESPP with respect to any offering period then underway
under the ESPP shall be determined by treating the last business day prior to
the Effective Time as the last day of such offering period and by making such
other pro-rata adjustments as may be necessary to reflect the shortened offering
period but otherwise treating such shortened offering period as a fully
effective and completed offering period for all purposes under the ESPP. Prior
to the Effective Time, the Company shall take all actions (including, if
appropriate, amending the terms of the ESPP) that are necessary to give effect
to the transactions contemplated by this Section 6.3(c).
6.4 EMPLOYEE BENEFITS.
(a) Parent shall make available, or shall cause the Surviving
Corporation to make available, at the Effective Time, (i) to each employee of
the Company who holds a position of Executive Vice President or higher as of the
date of this Agreement and who remains employed by the Company immediately prior
to the Effective Time, continued "at-will" employment for a minimum period of
180 days from the Effective Time, and (ii) to each employee of the Company who
holds a position at a level below Executive Vice President as of the date of
this Agreement and who remains employed by the Company immediately prior to the
Effective Time, continued "at-will" employment for a minimum period of 120 days
from the Effective Time. The terms and conditions of employment for each
employee of the Company who, following the Effective Time, either continues his
or her employment with the Surviving Corporation, or becomes an employee of
Parent (in either case, a "Continuing Employee"), will include (x) the right to
receive, during the applicable minimum period specified above, a salary and
benefits under health and welfare plans that are comparable to the salary and
the benefits under health and welfare plans to which such Continuing Employee is
entitled as of the date of this Agreement, and (y) the right to continue
receiving the salary and benefits described in clause "(x)" of this sentence for
the remainder of the applicable minimum period if the employment of such
Continuing Employee were terminated by the Surviving Corporation or Parent
during such minimum period. Nothing contained in this Section 6.4 shall be
construed to (i) limit the right of Parent or the Surviving Corporation to amend
or terminate any benefit plan at any time or (ii) affect the "at-will" status of
any Continuing Employee.
46.
(b) Following the expiration of the applicable minimum period specified
in Section 6.4(a) with respect to a Continuing Employee, such Continuing
Employee (if he or she continues to be employed by the Surviving Corporation or
Parent) shall have the right to receive benefits under Parent's health and
welfare benefit plans that are comparable to the benefits under such plans to
which similarly situated employees of Parent are then entitled. To the extent
permitted by applicable Legal Requirements and the terms of such plans, for
purposes of participation, vesting and differential benefits based on length of
service in any such plan, all service by a Continuing Employee with the Company
shall be credited toward service with Parent.
(c) Parent shall, at or after the Effective Time, grant to Continuing
Employees options to purchase common stock of Parent under Parent's stock option
plans. Parent shall determine the levels of such stock option grants on an
employee-by-employee basis, in a manner determined by Parent to be adequate to
maintain continuing incentives for Continuing Employees after the Effective
Time.
(d) Unless otherwise directed in writing by Parent, the Company shall
take (or cause to be taken) all actions necessary or appropriate to terminate,
effective immediately prior to the time at which any Acquired Corporation or any
Company Affiliate becomes under common control with Parent within the meaning of
any of Sections 414(b), 414(c), 414(m) and 414(o) of the Code, any Company
Employee Plan that contains a cash or deferred arrangement intended to qualify
under Section 401(k) of the Code.
6.5 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) All rights to indemnification by the Company existing in favor of
those Persons who are directors and officers of the Company as of the date of
this Agreement (the "Indemnified Persons") for their acts and omissions
occurring prior to the Effective Time, as provided in the Company's bylaws (as
in effect as of the date of this Agreement) and as provided in the
indemnification agreements between the Company and said Indemnified Persons (as
in effect as of the date of this Agreement) in the forms disclosed by the
Company to Parent prior to the date of this Agreement, shall survive the Merger
and shall be observed by the Surviving Corporation to the fullest extent
available under Delaware law.
(b) From the Effective Time until the sixth anniversary of the
Effective Time, Parent shall cause the Surviving Corporation to, and the
Surviving Corporation shall, maintain in effect, for the benefit of the
Indemnified Persons with respect to their acts and omissions occurring prior to
the Effective Time, the existing policy of directors' and officers' liability
insurance maintained by the Company as of the date of this Agreement in the form
disclosed by the Company to Parent prior to the date of this Agreement (the
"Existing Policy"); PROVIDED, HOWEVER, that (i) the Surviving Corporation may
substitute for the Existing Policy a policy or policies of comparable coverage,
and (ii) the Surviving Corporation shall not be required to pay annual premiums
for the Existing Policy (or for any substitute policies) in excess of $1,250,000
in the aggregate. In the event any future annual premiums for the Existing
Policy (or any substitute policies) exceed in the aggregate $1,250,000, the
Surviving Corporation shall be entitled to reduce the amount of coverage of the
Existing Policy (or any substitute policies) to the amount of coverage that can
be obtained for a premium equal to $1,250,000.
47.
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, or (ii)
transfers or conveys all or substantially all of its properties and assets to
any Person, then, and in each such case, to the extent necessary to effectuate
the purposes of this Section 6.5, proper provision shall be made so that the
successors and assigns of Parent assume the obligations set forth in this
Section 6.5, and none of the actions described in clause "(i)" or clause "(ii)"
shall be taken until such provision is made.
(d) Parent shall cause the Surviving Corporation to perform all of the
Surviving Corporation's obligations under this Section 6.5. The provisions of
this Section 6.5 shall be enforceable by each Indemnified Person and his heirs
and representatives, and are in addition to and not in substitution for, any
other right to indemnification or contribution that such Indemnified Person may
have under the certificate of incorporation and bylaws of the Company or the
Surviving Corporation, under any Acquired Corporation Contract, under the DGCL
or otherwise.
6.6 ADDITIONAL AGREEMENTS.
(a) Subject to Section 6.6(b) and the other terms and provisions of
this Agreement, Parent and the Company shall use reasonable efforts to take, or
cause to be taken, all actions necessary to consummate the transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, but subject to Section 6.6(b) and the other terms and provisions of
this Agreement, each party to this Agreement (i) shall make all filings (if any)
and give all notices (if any) required to be made and given by such party in
connection with the Offer and the Merger and the other transactions contemplated
by this Agreement, (ii) shall use reasonable efforts to obtain each Consent (if
any) required to be obtained (pursuant to any applicable Legal Requirement or
Contract, or otherwise) by such party in connection with the Offer and the
Merger or any of the other transactions contemplated by this Agreement, and
(iii) shall use reasonable efforts to lift any restraint, injunction or other
legal bar to the Offer, the Merger or any of the other transactions contemplated
by this Agreement. Each party shall promptly deliver to the other parties a copy
of each such filing made, each such notice given and each such Consent obtained
by such party during the Pre-Closing Period.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Parent shall not have any obligation under this Agreement: (i) to
dispose of or transfer or cause any of its Subsidiaries to dispose of or
transfer any assets, or to commit to cause any of the Acquired Corporations to
dispose of any assets; (ii) to discontinue or cause any of its Subsidiaries to
discontinue developing or offering any product; (iii) to license or otherwise
make available, or cause any of its Subsidiaries to license or otherwise make
available, to any Person, any right with respect to any of its products for any
indication, or any other Intellectual Property or Intellectual Property Right,
or to commit to cause any of the Acquired Corporations to license or otherwise
make available to any Person any right with respect to Emtricitabine or any
other material Company Pharmaceutical Product for any indication, or any related
Intellectual Property or Intellectual Property Right; (iv) to hold separate or
cause any of its Subsidiaries to hold separate any assets or operations (either
before or after the Closing Date), or to commit to cause any of the Acquired
Corporations to hold separate any assets or operations; or (v) to make or
48.
cause any of its Subsidiaries to make any commitment (to any Governmental Body
or otherwise) regarding its future operations or the future operations of any of
the Acquired Corporations.
6.7 DISCLOSURE. Parent and the Company shall consult with each other
and consider in good faith the comments of one another before issuing any press
release or otherwise making any public statement with respect to the Offer, the
Merger or any of the other transactions contemplated by this Agreement.
6.8 SECTION 16 MATTERS. Prior to the Effective Time, the Company shall
take such reasonable steps as are required to cause the disposition of Company
Common Stock and Company Options in connection with the Merger by each
individual who is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to the Company to be exempt from Section 16(b) of the
Exchange Act pursuant to Rule 16b-3 under the Exchange Act. If the Company
delivers the Section 16 Information (as defined below) to Parent at least 30
days prior to the Effective Time, then, prior to the Effective Time, Parent
shall take such reasonable steps as are required to cause the acquisition of
options to purchase shares of Parent Common Stock in connection with the Merger
by each individual who, immediately after the Effective Time, will become
subject to the reporting requirements of Section 16(a) of the Exchange Act with
respect to Parent to be exempt from Section 16(b) of the Exchange Act pursuant
to Rule 16b-3 under the Exchange Act. For purposes of this Section 6.8, "Section
16 Information" shall mean for each individual who, immediately after the
Effective Time will become subject to the reporting requirements of Section
16(a) of the Exchange Act with respect to Parent, the number of shares of
Company Common Stock subject to Company Options held by such individual that are
expected to be converted into options to purchase shares of Parent Common Stock
in connection with the Merger.
6.9 RESIGNATION OF OFFICERS AND DIRECTORS. The Company shall use
reasonable efforts to obtain and deliver to Parent at the Closing (effective as
of the Effective Time) the resignation of each officer and director of each of
the Acquired Corporations (other than those designees of Parent elected to the
board of directors of each of the Acquired Corporations pursuant to Section
1.3), it being understood that any such resignation of an officer of the Company
shall constitute a termination by the Company Without Cause upon a Change in
Control (both as defined in any employment agreement to which such officer is a
party) as provided in any employment agreement to which such officer is a party.
6.10 TERMINATION OF RIGHTS. The Company shall use reasonable efforts to
ensure that, from and after the Effective Time, neither Warburg nor any
affiliate of Warburg will have any contractual or other right or claim against
the Surviving Corporation or Parent relating to the issuance, transfer or
registration of any shares of Company Common Stock.
6.11 LOAN. At or before the close of business on December 10, 2002,
Parent will lend the Company the sum of $50,000,000, and contemporaneously with
such loan, Parent and the Company will execute and deliver the Promissory Note
and the Investor Rights Agreement.
49.
SECTION 7. CONDITIONS PRECEDENT TO THE MERGER
The obligations of the parties to effect the Merger are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
7.1 STOCKHOLDER APPROVAL. If required by applicable law, this Agreement
shall have been duly adopted by the Required Company Stockholder Vote.
7.2 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.3 CONSUMMATION OF OFFER. Acquisition Sub shall have accepted for
payment and paid for shares of Company Common Stock pursuant to the Offer.
SECTION 8. TERMINATION
8.1 TERMINATION. This Agreement may be terminated:
(a) by mutual written consent of Parent and the Company at any
time prior to the Effective Time;
(b) by either Parent or the Company at any time prior to the
Effective Time if a court of competent jurisdiction or other
Governmental Body shall have issued a final and nonappealable order,
decree or ruling, or shall have taken any other action, having the
effect of permanently restraining, enjoining or otherwise prohibiting
the acquisition or acceptance for payment of, or payment for, shares of
Company Common Stock pursuant to the Offer or the Merger or making the
purchase of or payment for shares of Company Common Stock pursuant to
the Offer or the consummation of the Merger illegal; PROVIDED, HOWEVER,
that a party shall not be permitted to terminate this Agreement
pursuant to this Section 8.1(b) if the imposition of such order, decree
or ruling or the taking of such action is attributable to the failure
of such party to perform any covenant in this Agreement required to be
performed by such party on or prior to the Acceptance Date;
(c) by either Parent or the Company at any time prior to the
Acceptance Date if the Offer shall have expired without the acceptance
for payment of shares of Company Common Stock; PROVIDED, HOWEVER, that
a party shall not be permitted to terminate this Agreement pursuant to
this Section 8.1(c) if the failure to accept shares of Company Common
Stock for payment pursuant to the Offer is attributable to a failure on
the part of such party to perform any covenant in this Agreement
required to be performed by such party on or prior to the Acceptance
Date;
(d) by either Parent or the Company at any time prior to the
Acceptance Date if the acceptance for payment of shares of Company
Common Stock pursuant to the Offer shall not have occurred on or prior
to the close of business on June 1, 2003; PROVIDED, HOWEVER, that a
party shall not be permitted to terminate this Agreement pursuant to
this Section 8.1(d) if the failure to accept shares of Company
50.
Common Stock for payment pursuant to the Offer by the close of business
on June 1, 2003 is attributable to a failure on the part of such party
to perform any covenant in this Agreement required to be performed by
such party on or prior to the Acceptance Date;
(e) by Parent or the Company on April 21, 2003, if (i) the
condition set forth in clause "(a)," clause "(e)" or clause "(f)" of
Annex II shall not have been satisfied prior to the termination of this
Agreement, and (ii) the Company shall have delivered to Parent, on
April 15, 2003, an irrevocable notice of intended termination of this
Agreement pursuant to this Section 8.1(e); PROVIDED, HOWEVER, that the
Company shall not be permitted to terminate this Agreement pursuant to
this Section 8.1(e) if (A) the failure to satisfy such condition is
attributable to a failure on the part of the Company to perform any
covenant in this Agreement required to be performed by the Company on
or prior to the Acceptance Date or (B) Parent shall have delivered to
the Company on or prior to April 21, 2003 a document confirming that
Parent is forgiving $20,000,000 of the principal balance of the
Promissory Note;
(f) by Parent or the Company on May 21, 2003, if (i) the
condition set forth in clause "(a)," clause "(e)" or clause "(f)" of
Annex II shall not have been satisfied prior to the termination of this
Agreement, and (ii) the Company shall have delivered to Parent, on May
15, 2003, an irrevocable notice of intended termination of this
Agreement pursuant to this Section 8.1(f); PROVIDED, HOWEVER, that the
Company shall not be permitted to terminate this Agreement pursuant to
this Section 8.1(f) if (A) the failure to satisfy such condition is
attributable to a failure on the part of the Company to perform any
covenant in this Agreement required to be performed by the Company on
or prior to the Acceptance Date or (B) Parent shall have delivered to
the Company on or prior to May 21, 2003 a document confirming that
Parent is forgiving $10,000,000 of the principal balance of the
Promissory Note;
(g) by Parent at any time prior to the Acceptance Date (i) if
a Triggering Event shall have occurred or (ii) if (A) the board of
directors of the Company shall have taken any action demonstrating that
the board of directors of the Company does not support the Offer or the
Merger or does not believe that the Offer or the Merger is in the best
interests of the Company's stockholders or (B) a tender or exchange
offer relating to securities of the Company shall have been commenced
by any Person (other than Parent and Acquisition Sub) and the Company
shall not have sent to its securityholders, within ten business days
after the commencement of such tender or exchange offer, a statement
disclosing that the Company recommends rejection of such tender or
exchange offer;
(h) by the Company at any time prior to the Acceptance Date,
in order to accept a Superior Offer and enter into the Specified
Agreement (as defined below) relating to such Superior Offer, if (i)
such Superior Offer shall not have resulted directly or indirectly from
any breach of Section 5.3 or from any action taken by the Company or
any of its Representatives with the intent of circumventing any of the
provisions set forth in Section 5.3, (ii) the board of directors of the
Company, after satisfying all of the requirements set forth in Section
1.2(b) and otherwise causing the Company to comply in all material
respects with the provisions of this Agreement, shall have authorized
the
51.
Company to enter into a binding written definitive acquisition
agreement providing for the consummation of a transaction constituting
a Superior Offer (the "Specified Agreement"), (iii) the Company shall
have delivered to Parent a written notice (that includes a copy of the
Specified Agreement as an attachment) containing the Company's
representation that the Specified Agreement has been duly executed and
delivered to the Company by the other party thereto, that the board of
directors of the Company has authorized the execution and delivery of
the Specified Agreement on behalf of the Company and that the Company
will enter into the Specified Agreement immediately upon termination of
this Agreement pursuant to this Section 8.1(h), (iv) a period of at
least three business days shall have elapsed since the receipt by
Parent of such notice, and the Company shall have made its
Representatives reasonably available during such period for the purpose
of engaging in negotiations with Parent regarding a possible amendment
of the Offer or a possible alternative transaction, (v) any proposal by
Parent to amend the Offer or enter into an alternative transaction
shall have been considered by the board of directors of the Company in
good faith, and the Company's board of directors shall have determined
in good faith (after having taken into account the advice of the
Company's outside legal counsel and the advice of Banc of America
Securities LLC or another independent financial advisor of nationally
recognized reputation) that the terms of the proposed amended Offer (or
other alternative transaction) are not as favorable to the Company's
stockholders, from a financial point of view, as the transaction
contemplated by the Specified Agreement, (vi) the Company shall have
paid the entire outstanding principal balance of, all accrued and
unpaid interest on and any other amounts owing under the Promissory
Note, and (vii) the Company shall have paid to Parent the fee required
to be paid to Parent pursuant to Section 8.3(c);
(i) by Parent at any time prior to the Acceptance Date if (i)
any of the Company's representations and warranties contained in this
Agreement shall be inaccurate as of the date of this Agreement such
that the condition set forth in clause "(b)" of Annex II would not be
satisfied (it being understood that, for purposes of determining the
accuracy of such representations and warranties as of the date of this
Agreement, (A) all materiality qualifications contained in such
representations and warranties shall be disregarded and (B) any update
of or modification to the Company Disclosure Schedule made or purported
to have been made after the date of this Agreement shall be
disregarded), or (ii) any of the Company's covenants contained in this
Agreement shall have been breached such that the condition set forth in
paragraph "(c)" of Annex II would not be satisfied; PROVIDED, HOWEVER,
that if an inaccuracy in any of the Company's representations and
warranties or a breach of a covenant by the Company is curable by the
Company within 30 days after the date of the occurrence of such
inaccuracy or breach and the Company is continuing to exercise
reasonable efforts to cure such inaccuracy or breach, then Parent may
not terminate this Agreement under this Section 8.1(i) on account of
such inaccuracy or breach (1) during the 30-day period commencing on
the date on which the Company receives notice of such inaccuracy or
breach or (2) after such 30-day period if such inaccuracy or breach
shall have been cured in a manner that does not result in a breach of
any covenant of the Company;
(j) by the Company at any time prior to the Acceptance Date if
(i) any of Parent's representations and warranties contained in this
Agreement shall be materially
52.
inaccurate as of the date of this Agreement, such that the inaccuracy
in Parent's representations and warranties shall have a material
adverse effect on Parent's ability to satisfy its obligations under
this Agreement (it being understood that, for purposes of determining
the accuracy of such representations and warranties as of the date of
this Agreement, all materiality qualifications contained in such
representations and warranties shall be disregarded), or (ii) any of
Parent's covenants contained in this Agreement shall have been
materially breached; PROVIDED, HOWEVER, that if an inaccuracy in any of
Parent's representations and warranties or a breach of a covenant by
Parent is curable by Parent within 30 days after the date of the
occurrence of such inaccuracy or breach and Parent is continuing to
exercise reasonable efforts to cure such inaccuracy or breach, then the
Company may not terminate this Agreement under this Section 8.1(j) on
account of such inaccuracy or breach (1) during the 30-day period
commencing on the date on which Parent receives notice of such
inaccuracy or breach or (2) after such 30-day period if such inaccuracy
or breach shall have been cured in a manner that does not result in a
breach of any covenant of Parent; or
(k) by Parent or the Company on or after December 11, 2002 if
the other party shall not have taken the actions required to be taken
by such other party under Section 6.11 prior to the termination of this
Agreement.
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 8.1, this Agreement shall be of no further
force or effect; PROVIDED, HOWEVER, that (i) this Section 8.2, Section 8.3 and
Section 9 (and the Confidentiality Agreement) shall survive the termination of
this Agreement and shall remain in full force and effect, (ii) the termination
of this Agreement shall not relieve any party from any liability for fraud, for
any willful or knowing breach by such party of any representation or warranty
set forth in this Agreement or for any breach of any covenant or obligation
contained in this Agreement and (iii) no termination of this Agreement shall in
any way affect any of the parties' rights or obligations with respect to any
shares of Company Common Stock accepted for payment and paid for pursuant to the
Offer prior to such termination.
8.3 EXPENSES; TERMINATION FEES.
(a) Except as set forth in this Section 8.3, all fees and expenses
incurred in connection with this Agreement and the Offer, the Merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, whether or not any shares of Company Common Stock are
purchased pursuant to the Offer and whether or not the Merger is consummated;
PROVIDED, HOWEVER, that Parent and the Company shall share equally all fees and
expenses, other than attorneys' fees, incurred in connection with the filing,
printing and mailing of the Offer Documents and the Proxy Statement and any
amendments or supplements thereto.
(b) If (i) this Agreement is terminated by Parent or the Company
pursuant to Section 8.1(c) or Section 8.1(d), (ii) at or prior to the time of
the termination of this Agreement an Acquisition Proposal shall have been
disclosed, announced, commenced, submitted or made and (iii) within 360 days
after the date of termination of this Agreement, an Acquisition Transaction is
consummated or the Company enters into a definitive agreement
53.
contemplating an Acquisition Transaction, then the Company shall pay to Parent,
in cash, a nonrefundable fee in an amount equal to $18,000,000 at or prior to
the consummation of such Acquisition Transaction. Solely for purposes of clause
"(iii)" of the preceding sentence, (1) the term "Acquisition Transaction" shall
not be deemed to include a pure equity financing transaction that is not related
to a merger, consolidation, amalgamation, share exchange, business combination,
tender offer or exchange offer if, following such pure equity financing
transaction, no Person or "group" (as defined in the Exchange Act or the rules
thereunder) of Persons has beneficial or record ownership of securities
representing more than 35% of the outstanding securities of any class of voting
securities of any of the Acquired Corporations, (2) clause "(b)(ii)" of the
definition of Acquisition Transaction shall be disregarded, and (3) each
reference in the definition of Acquisition Transaction to "15%" shall be deemed
to refer instead to "35%."
(c) If this Agreement is terminated by Parent pursuant to Section
8.1(g)(i) or by the Company pursuant to Section 8.1(h), then the Company shall
pay to Parent, in cash at the time specified in the next sentence, a
nonrefundable fee in an amount equal to $18,000,000. In the case of termination
of this Agreement by the Company pursuant to Section 8.1(h), the fee referred to
in the preceding sentence shall be paid by the Company at or prior to the time
of such termination; and in the case of termination of this Agreement by Parent
pursuant to Section 8.1(g)(i), the fee referred to in the preceding sentence
shall be paid by the Company within two business days after such termination.
(d) If this Agreement is terminated by Parent pursuant to Section
8.1(g)(ii), then the Company shall make a nonrefundable cash payment to Parent,
within two business days after such termination, in an amount equal to the
lesser of $1,500,000 or the aggregate amount of all fees and expenses (including
all attorneys' fees, accountants' fees and filing fees) that have been paid or
that may become payable by or on behalf of Parent in connection with the
preparation and negotiation of this Agreement and otherwise in connection with
the Offer, the Merger or any of the other transactions contemplated by this
Agreement.
(e) If the Company fails to pay when due any amount payable under this
Section 8.3, then (i) the Company shall reimburse Parent for all costs and
expenses (including reasonable fees and reasonable disbursements of counsel)
incurred in connection with the collection of such overdue amount and the
enforcement by Parent of its rights under this Section 8.3, and (ii) the Company
shall pay to Parent interest on such overdue amount (for the period commencing
as of the date such overdue amount was originally required to be paid and ending
on the date such overdue amount is actually paid to Parent in full) at a rate
per annum three percentage points above the "prime rate" (as announced by Bank
of America, N.A. or any successor thereto) in effect on the date such overdue
amount was originally required to be paid.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of Parent and the Company;
PROVIDED, HOWEVER, that after the adoption of this Agreement by the Company's
stockholders, no amendment shall be made which by law requires further approval
of the stockholders of the Company without the further approval of such
stockholders.
54.
9.2 WAIVER.
(a) No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of
any party in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement shall survive the
acceptance for payment of shares of Company Common Stock pursuant to the
Offer.
9.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the other
agreements referred to herein constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among or
between any of the parties with respect to the subject matter hereof and
thereof; PROVIDED, HOWEVER, that the Confidentiality Agreement shall not be
superseded and shall remain in full force and effect. This Agreement may be
executed in several counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same instrument.
9.5 APPLICABLE LAW; JURISDICTION. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. In any action between any of the
parties arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement, (a) each of the parties
irrevocably and unconditionally consents and submits to the jurisdiction and
venue of the state and federal courts located in the State of Delaware and
(b) each of the parties irrevocably waives the right to trial by jury. Each
of the parties hereby irrevocably waives (to the fullest extent permitted by
applicable law), and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the state or federal courts in the State of Delaware for any
reason other than the failure to lawfully serve process, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in any such court (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), (c) that such action or proceeding is
brought in an inconvenient forum, (d) that the venue of such action or
proceeding is improper and (e) that this Agreement, or the subject matter of
this Agreement, may not be enforced in or by any such court.
55.
9.6 DISCLOSURE SCHEDULE.
(a) The Company Disclosure Schedule shall be arranged in separate parts
corresponding to the numbered and lettered sections contained in Section 3, and
the information disclosed in any numbered or lettered part shall be deemed to
relate to and to qualify only the particular representation or warranty set
forth in the corresponding numbered or lettered section in Section 3, and shall
not be deemed to relate to or to qualify any other representation or warranty,
except to the extent that it would be readily apparent to a reader reviewing
such information that such information also reflects an exception to such other
representation or warranty.
(b) For purposes of this Agreement, as of the date of this Agreement,
each statement or other item of information set forth in the Company Disclosure
Schedule shall be deemed to supplement the representations and warranties to
which such Company Disclosure Schedule refers.
9.7 ASSIGNABILITY; THIRD-PARTY BENEFICIARIES. This Agreement shall be
binding upon, and shall be enforceable by and inure solely to the benefit of,
the parties hereto and their respective successors and assigns; PROVIDED,
HOWEVER, that neither this Agreement nor any of the rights of any party under
this Agreement may be assigned by such party without the prior written consent
of the other parties, and any attempted assignment of this Agreement or any of
such rights by such party without such consent shall be void and of no effect.
Other than Section 6.5 (which is intended to be for the benefit of the
Indemnified Parties and may be enforced by the Indemnified Parties), nothing in
this Agreement, express or implied, is intended to or shall confer upon any
Company Employee or stockholder of the Company or any other Person (other than
the parties hereto) any right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement.
9.8 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received upon receipt at the address or
facsimile telephone number set forth beneath the name of such party below (or at
such other address or facsimile telephone number as such party shall have
specified in a written notice given to the other parties hereto):
56.
if to Parent or Acquisition Sub:
Gilead Sciences, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
Facsimile: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxx, Xx.
Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: 650-849-7400
if to the Company:
Triangle Pharmaceuticals, Inc.
0 Xxxxxxxxxx Xxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: General Counsel
Facsimile: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxx
Smith, Anderson, Blount, Dorsett, Xxxxxxxx &
Xxxxxxxx, L.L.P.
0000 Xxxxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
9.9 COOPERATION. Each party to this Agreement agrees to cooperate with
the other and to execute and deliver such further documents, certificates,
agreements and instruments and to take such other actions as may be reasonably
requested by the other parties to evidence or reflect the transactions
contemplated by this Agreement and to carry out the intent and purposes of this
Agreement.
9.10 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is
57.
determined to be invalid, unlawful, void or unenforceable, shall not be impaired
or otherwise affected and shall continue to be valid and enforceable to the
fullest extent permitted by law.
9.11 ENFORCEMENT. The parties agree that irreparable damage would occur
if any of the provisions of this Agreement was not performed in accordance with
its specific terms. It is accordingly agreed by the parties to this Agreement
that they each shall be entitled to specific performance of the terms of this
Agreement in addition to any other remedy to which each party is entitled at law
or in equity.
9.12 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include masculine
and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections," "Annexes" and "Schedules" are intended to refer to Sections of this
Agreement and Annexes or Schedules to this Agreement.
(e) For purposes of Section 3, a matter will be deemed to be "expressly
set forth in the factual disclosures contained in" a Company SEC Document only
if such matter: (i) is historical in nature and relates specifically to the
Company; (ii) is specifically disclosed in reasonable detail in such Company SEC
Document; and (iii) does not appear only as part of any forward-looking or
cautionary statement or general disclaimer, or only as part of any general
description of applicable Legal Requirements or general industry or other
conditions. Without limiting the generality of the foregoing, for purposes of
Section 3, except as set forth in the introduction to Section 3, no matter
incorporated by reference in any Company SEC Document shall (solely by virtue of
such incorporation by reference) be deemed to be "contained" in such Company SEC
Document.
(f) The bold-faced headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
58.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
GILEAD SCIENCES, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Printed Name: XXXX X. XXXXXX
-------------------------------
Title: Chief Executive Officer
--------------------------------------
SIMBOLO ACQUISITION SUB, INC.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Printed Name: Xxxx X. Xxxxxxxx
-------------------------------
Title: President
--------------------------------------
TRIANGLE PHARMACEUTICALS, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Printed Name: Xxxxxx X. Xxxxx
-------------------------------
Title: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
--------------------------------------
59.
ANNEX I
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Annex I):
XXXXXX. "Xxxxxx" shall mean Xxxxxx Laboratories, an Illinois
corporation.
ABBOTT AGREEMENT. "Abbott Agreement" shall mean that certain Supply and
Manufacturing Agreement, dated as of July 30, 2002, between the Company and
Abbott.
ACCEPTANCE DATE. "Acceptance Date" shall mean the first date on which
Acquisition Sub accepts any shares of Company Common Stock for payment pursuant
to the Offer.
ACQUIRED CORPORATION CONTRACT. "Acquired Corporation Contract" shall
mean any Contract: (a) to which any of the Acquired Corporations is a party; (b)
by which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
ACQUIRED CORPORATION PATENT RIGHT. "Acquired Corporation Patent Right"
shall mean any Patent Right within the Company IP that includes any claim
covering a Company Pharmaceutical Product or its method of therapeutic use or
manufacture.
ACQUIRED CORPORATION TRADE SECRETS. "Acquired Corporation Trade
Secrets" shall mean all present trade secret and similar rights, which exist
under the laws of any jurisdiction in the world, that are owned by, licensed to
or controlled by any Acquired Corporation and are material to the Company.
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer,
proposal, inquiry or indication of interest (other than an offer, proposal,
inquiry or indication of interest made or submitted by Parent) contemplating any
Acquisition Transaction.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction or series of transactions involving:
(a) (i) any merger, consolidation, amalgamation, share
exchange, business combination, recapitalization, tender offer,
exchange offer or other similar transaction in which any of the
Acquired Corporations is a constituent corporation, (ii) any merger,
consolidation, amalgamation, share exchange, business combination,
recapitalization, tender offer, exchange offer, transaction involving
the issuance or acquisition of securities or other similar transaction
in which a Person or "group" (as defined in the Exchange Act and the
rules thereunder) of Persons directly or indirectly acquires beneficial
or record ownership of securities representing more than 15% of the
outstanding securities of any class of voting securities of any of the
Acquired Corporations, or (iii) the issuance by any of the Acquired
Corporations (in connection
1.
with a merger or otherwise) of securities representing more than 15% of
the outstanding securities of any class of voting securities of any of
the Acquired Corporations;
(b) any (i) sale, lease, exchange, transfer, license,
acquisition or disposition of any business or businesses or assets that
constitute or account for 15% or more of the consolidated net revenues,
net income or assets of the Acquired Corporations or (ii) any license,
sublicense or assignment of, or any grant of any marketing,
distribution, co-promotion or other right with respect to, any Company
Pharmaceutical Product or any related Intellectual Property or
Intellectual Property Right material to any Company Pharmaceutical
Product; or
(c) any liquidation or dissolution of any of the Acquired
Corporations.
ADJUSTED OUTSTANDING SHARE NUMBER. "Adjusted Outstanding Share Number"
shall mean the sum of: (i) the aggregate number of shares of Company Common
Stock outstanding immediately prior to the acceptance of shares of Company
Common Stock pursuant to the Offer, PLUS (ii) at the election of Parent, an
additional number of shares up to but not exceeding the aggregate number of
shares of Company Common Stock issuable upon the exercise of any outstanding
option (or portion thereof) that is vested or is expected to become vested
(other than by reason of the Merger) on or before June 1, 2003, or any warrant
or other right to acquire capital stock of the Company, or upon the conversion
of any convertible security.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger to
which this Annex I is attached, as it may be amended from time to time.
AMDOXOVIR. "Amdoxovir" shall mean (i) (beta)-D-Dioxolanyl purines of
the formula set forth below wherein R is OH, Cl, NH2, or H, and X is H, alkyl,
acyl, monophosphate, diphosphate or triphosphate; (ii) all 5' alkylated and
acylated and N6 acylated derivatives thereof; (iii) any salts, esters, racemic
mixtures and purified enantiomers of any of the foregoing; and (iv) any and all
polymorphs, hydrates and solvates of any of the foregoing.
[GRAPHIC OMITTED]
BULK EMTRICITABINE. "Bulk Emtricitabine" shall mean the bulk form of
Emtricitabine, suitable for formulating into Finished Emtricitabine, as set
forth in filings made by the Company with Governmental Bodies for Coviracil or
for Emtricitabine, as such filings may be amended from time to time.
2.
CLEVUDINE. "Clevudine" shall mean the compound known as L-FMAU, with the
chemical name 2'-flouro-5-methyl-(beta)-L-arabinofuranosyluracil, including any
salts and esters thereof.
COBRA. "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
COMPANY AFFILIATE. "Company Affiliate" shall mean any Person under
common control with any of the Acquired Corporations within the meaning of any
of Sections 414(b), 414(c), 414(m) and 414(o) of the Code, and the regulations
issued thereunder.
COMPANY COMMON STOCK. "Company Common Stock" shall mean the Common
Stock, $0.001 par value per share, of the Company.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall mean
the disclosure schedule that has been prepared by the Company in accordance with
the requirements of Section 9.6 of the Agreement and that has been delivered by
the Company to Parent on the date of the Agreement.
COMPANY EMPLOYEE. "Company Employee" shall mean any current or former
employee or director of any of the Acquired Corporations or any Company
Affiliate.
COMPANY EMPLOYEE AGREEMENT. "Company Employee Agreement" shall mean any
agreement establishing a fixed term of employment between any of the Acquired
Corporations or any Company Affiliate and any Company Employee.
COMPANY EMPLOYEE PLAN. "Company Employee Plan" shall mean any plan,
program, policy, practice, Contract or other arrangement (other than a Company
Employee Agreement) providing for compensation, severance, termination pay,
deferred compensation, performance awards, stock or stock-related awards, fringe
benefits or other employee benefits or remuneration of any kind (whether
written, unwritten or otherwise, and whether funded or unfunded), including each
"employee benefit plan," within the meaning of Section 3(3) of ERISA (whether or
not ERISA is applicable to such plan), that is or has been maintained,
contributed to or required to be contributed to by any of the Acquired
Corporations or any Company Affiliate for the benefit of any Company Employee,
or with respect to which any of the Acquired Corporations or any Company
Affiliate has or may in the future have any liability or obligation.
COMPANY IP. "Company IP" shall mean all Intellectual Property Rights
and Intellectual Property in which any of the Acquired Corporations has (or
purports to have) an ownership interest or an exclusive license or similar
exclusive right.
COMPANY IP CONTRACT. "Company IP Contract" shall mean any Contract to
which any of the Acquired Corporations is or was a party, or by which any of the
Acquired Corporations is or was bound, that (i) contains any assignment or
license of, or any covenant not to assert or enforce, any Intellectual Property
Right or (ii) otherwise relates to any Company IP or any Intellectual Property
developed by, with or for any of the Acquired Corporations.
COMPANY PARTNER. "Company Partner" shall mean any manufacturer of any
Company Pharmaceutical Product.
3.
COMPANY PHARMACEUTICAL PRODUCT. "Company Pharmaceutical Product" shall
mean any product of the Company containing Amdoxovir, Clevudine or
Emtricitabine.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any legally binding written, oral or
other agreement, contract, subcontract, lease, understanding, instrument, note,
option, warranty, purchase order, license, sublicense, insurance policy, benefit
plan or legally binding commitment or undertaking of any nature.
COVIRACIL. "Coviracil" shall mean Finished Emtricitabine in either (i)
a packaged form as 30 200mg Emtricitabine capsules per bottle or (ii) a liquid
form as 10mg/mL Emtricitabine solution in a 170 mL bottle, in each case as set
forth in filings made by the Company with Governmental Bodies for Coviracil, as
such filings may be amended from time to time.
EMTRICITABINE. "Emtricitabine" shall have the meaning set forth in
Part 3.8 of the Company Disclosure Schedule.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any company
limited by shares, limited liability company or joint stock company), firm,
society or other enterprise, association, organization or entity.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
FINISHED EMTRICITABINE. "Finished Emtricitabine" shall mean a finished
pharmaceutical formulation containing Emtricitabine as an active ingredient.
FMLA. "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended.
4.
FOREIGN PLAN. "Foreign Plan" shall mean any: (i) plan, program, policy,
practice, Contract or other arrangement mandated by a Governmental Body other
than the United States; (ii) Company Employee Plan maintained or contributed to
by any of the Acquired Corporations or any Company Affiliate that is not subject
to United States law; or (iii) Company Employee Plan that covers or has covered
Company Employees whose services are performed primarily outside of the United
States.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any
permit, license, certificate, franchise, permission, variance, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, ministry, fund, foundation, center, organization,
unit, body or Entity and any court or other tribunal).
HIPAA. "HIPAA" shall mean the Health Insurance Portability and
Accountability Act of 1996, as amended.
HSR ACT. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
INTELLECTUAL PROPERTY. "Intellectual Property" shall mean algorithms,
apparatus, assay components, biological materials, cell lines, clinical data,
chemical compositions or structures, databases, data collections, diagrams,
formulae, inventions (whether or not patentable), know-how, logos, marks
(including brand names, product names, logos, and slogans), methods, network
configurations and architectures, processes, proprietary information, protocols,
schematics, specifications, software, techniques, URLs, web sites, works of
authorship and other forms of technology (whether or not embodied in any
tangible form and including all tangible embodiments of the foregoing, such as
instruction manuals, laboratory notebooks, prototypes, samples, studies and
summaries).
INTELLECTUAL PROPERTY RIGHTS. "Intellectual Property Rights" shall mean
all past and present rights of the following types, which exist or have been
created under the laws of any jurisdiction in the world: (i) rights associated
with works of authorship, including exclusive exploitation rights, copyrights
and moral rights; (ii) trademark and trade name rights and similar rights; (iii)
trade secret rights; (iv) patent and industrial property rights; (v) other
proprietary rights in Intellectual Property; and (vi) rights in or relating to
registrations, renewals, extensions, combinations, divisions and reissues of,
and applications for, any of the rights referred to in clauses "(i)" through
"(v)" above.
IRS. "IRS" shall mean the United States Internal Revenue Service.
KNOWLEDGE. The Company shall be deemed to have "Knowledge" of any fact
or other matter if such fact or other matter is within the knowledge of any
member of the Company's
5.
board of directors or any officer of the Company with the title of executive
vice president or in a more senior position; and with respect to the
representations and warranties in Section 3.14 of the Agreement, the Company
shall also be deemed to have "Knowledge" of any fact or other matter if such
fact or other matter is within the knowledge of any employee in a clinical or
regulatory department with the title of senior director or in a more senior
position.
LAMIVUDINE. "Lamivudine" shall mean lamivudine (2R,cis)-4-amino-1-
(2-hydroxymethyl-1,3-oxathiolan-5-yl)-(1H)-pyrimidin-2-one.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), audit or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
court or other Governmental Body or any arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body (or under the
authority of the Nasdaq National Market).
PARENT COMMON STOCK. "Parent Common Stock" shall mean the Common Stock,
$.001 par value per share, of Parent.
PATENT RIGHT. "Patent Right" shall mean (a) any patent or patent
application or (b) any continuation, continuation-in-part, divisional,
re-examination, extension, reissue or foreign counterpart of any patent or
patent application.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PROXY STATEMENT. "Proxy Statement" shall mean the proxy statement to be
sent to the Company's stockholders in connection with the Company Stockholders'
Meeting.
REGISTERED IP. "Registered IP" shall mean all Intellectual Property
Rights that are registered, filed or issued under the authority of, with or by
any Governmental Body, including all patents, registered copyrights and
registered trademarks and all applications for any of the foregoing.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
SUBSIDIARY. An Entity shall be deemed to be a "Subsidiary" of
another Person if such Person directly or indirectly owns or purports to own,
beneficially or of record, (a) an amount of voting securities of other
interests in such Entity that is sufficient to enable such Person to elect at
least a majority of the members of such Entity's board of directors or other
governing body, or (b) at least 50% of the outstanding equity or financial
interests or such Entity.
6.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to acquire (or otherwise enter into a
transaction which would result in such third party becoming the holder of) at
least a majority of the outstanding shares of Company Common Stock on terms that
the board of directors of the Company determines, in its good faith judgment
(after taking into account the price and consideration offered and the
likelihood that the proposed acquisition will ultimately be consummated and
after taking into account the advice of Banc of America Securities LLC or
another independent financial advisor of nationally recognized reputation) to be
more favorable to the Company's stockholders than the terms of the Offer and the
Merger; PROVIDED, HOWEVER, that any such offer shall not be deemed to be a
"Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed and is not reasonably capable of
being obtained by such third party.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, estimated tax,
unemployment tax, national health insurance tax, excise tax, ad valorem tax,
transfer tax, stamp tax, sales tax, use tax, property tax, business tax,
withholding tax or payroll tax), levy, assessment, tariff, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
TRIGGERING EVENT. A "Triggering Event" shall be deemed to have occurred
if: (i) the board of directors of the Company shall have failed to recommend
that the Company's stockholders accept the Offer, tender their shares of Company
Common Stock pursuant to the Offer or (if required by applicable law) vote to
adopt the Agreement, or shall have withdrawn or modified in a manner adverse to
Parent the Company Board Recommendation; (ii) the Company shall have failed to
include in the Offer Documents the Company Board Recommendation; (iii) the board
of directors of the Company shall have approved, endorsed or recommended any
Acquisition Proposal; (iv) the Company shall have entered into any letter of
intent or similar document or any Contract contemplating any Acquisition
Transaction; or (v) any Acquisition Proposal shall have resulted directly or
indirectly from any of the Acquired Corporations or any Representative of any of
the Acquired Corporations having breached, or having taken any action with the
intent of circumventing, any of the provisions set forth in Section 5.3.
UNAUDITED INTERIM BALANCE SHEET. "Unaudited Interim Balance Sheet"
shall mean the unaudited consolidated balance sheet of the Company and its
consolidated subsidiaries as of September 30, 2002, included in the Company's
Report on Form 10-Q for the fiscal quarter ended September 30, 2002, as filed
with the SEC prior to the date of this Agreement.
WARBURG. "Warburg" shall mean the Warburg Pincus Private Equity Fund
VIII, X.X.
XXXXX. "Yuhan" shall mean Yuhan Corporation.
7.
ANNEX II
CONDITIONS OF THE OFFER
Capitalized terms used but not defined in this Annex II shall have the
meanings set forth in the Agreement and Plan of Merger to which this Annex II is
attached (the "Agreement"). Notwithstanding any other provision of the Offer or
the Agreement, Acquisition Sub shall not be required to accept for payment, or
(subject to any applicable rule or regulation of the SEC) pay for, and may delay
the acceptance of payment of, or (subject to any applicable rule or regulation
of the SEC) the payment for, any tendered shares of Company Common Stock, and
(subject to Section 1.1(c)(ii) of the Agreement) may terminate the Offer on any
scheduled expiration date and not accept for payment any tendered shares of
Company Common Stock, if (i) the Minimum Condition shall not have been satisfied
by midnight, U.S. Eastern Time, on the expiration date of the Offer, or (ii) any
of the following additional conditions shall not have been satisfied:
(a) the waiting period applicable to the purchase of or
payment for shares of Company Common Stock pursuant to the Offer under
the HSR Act shall have expired or been terminated, and there shall not
be in effect any voluntary agreement between Parent and the Federal
Trade Commission or the Department of Justice pursuant to which Parent
has agreed not to consummate the Offer for any period of time, which
agreement has been entered into consistent with Parent's obligations
under Sections 6.2 and 6.6;
(b) each of the representations and warranties of the Company
contained in the Agreement shall have been accurate in all respects as
of the date of the Agreement (except that any representation or
warranty that, by its express terms, speaks only as of an earlier date
need only have been accurate as of such earlier date); PROVIDED,
HOWEVER, that (i) for avoidance of doubt, this clause "(b)" does not
require any of the Company's representations and warranties contained
in the Agreement to be accurate as of a date subsequent to the date of
the Agreement, (ii) for purposes of determining the accuracy of such
representations and warranties as of the date of the Agreement (or any
applicable earlier date), (A) all materiality qualifications contained
in such representations and warranties shall be disregarded and (B) any
update of or modification to the Company Disclosure Schedule made or
purported to have been made after the date of the Agreement shall be
disregarded, and (iii) the inaccuracies in such representations and
warranties shall be disregarded for purposes of this clause "(b)" if
all such inaccuracies and the circumstances and events underlying such
inaccuracies, considered collectively:
(x) do not have a material and adverse effect on the
intrinsic value of the Acquired Corporations taken as a whole,
as compared to the intrinsic value of the Acquired
Corporations taken as a whole as of the date of the Agreement
assuming the accuracy as of the date of the Agreement of such
representations and warranties;
(y) do not have a material and adverse effect on the
financial condition of the Acquired Corporations taken as a
whole, as compared to the financial condition of the Acquired
Corporations taken as a whole as of the date of the Agreement
assuming the accuracy as of the date of the Agreement of such
representations and warranties; and
8.
(z) do not have a material and adverse effect on the
capitalization of the Company, as compared to the
capitalization of the Company as of the date of the Agreement
assuming the accuracy as of the date of the Agreement of such
representations and warranties.
(c) each covenant or obligation that the Company is required
to comply with or to perform at or prior to the Acceptance Date shall
have been complied with and performed in all material respects;
(d) Parent and the Company shall have received a certificate
executed by the Chief Executive Officer and Chief Financial Officer of
the Company confirming that the conditions set forth in clauses "(b)"
and "(c)" of this Annex II have been duly satisfied, which certificate
shall be in full force and effect;
(e) no temporary restraining order, preliminary or permanent
injunction or other order preventing the purchase of or payment for
shares of Company Common Stock pursuant to the Offer, or preventing
consummation of the Merger or any of the other transactions
contemplated by the Agreement, shall have been issued by any court of
competent jurisdiction and remain in effect, and there shall not be any
Legal Requirement enacted or deemed applicable to the Offer, the Merger
or any of the other transactions contemplated by the Agreement that
makes the purchase of or payment for shares of Company Common Stock
pursuant to the Offer, or the consummation of the Merger or any of the
other transactions contemplated by the Agreement, illegal; and
(f) there shall not be pending or overtly threatened any Legal
Proceeding in which a Governmental Body is or is threatened to become a
party or is otherwise involved (excluding any Legal Proceeding where
the only involvement of any Governmental Body is that a court or other
tribunal is the venue for the adjudication of such Legal Proceeding):
(i) challenging or seeking to restrain or prohibit the purchase of or
payment for shares of Company Common Stock pursuant to the Offer, or
the consummation of the Merger or any of the other transactions
contemplated by the Agreement; (ii) relating to the Offer, the Merger
or any of the other transactions contemplated by the Agreement and
seeking to obtain from Parent or any of the Acquired Corporations any
damages or other relief that may be material to Parent or the Acquired
Corporations; (iii) seeking to prohibit or limit in any material
respect Parent's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the
Surviving Corporation; (iv) that if adversely determined could
reasonably be expected to have the effect of materially and adversely
affecting the right of Parent or any of the Acquired Corporations to
own the assets or operate the business of the Acquired Corporations; or
(v) seeking to compel any of the Acquired Corporations, Parent or any
Subsidiary of Parent to dispose of, hold separate or license any
material asset or material right as a result of the Offer, the Merger
or any of the other transactions contemplated by the Agreement.
The foregoing conditions are for the sole benefit of Parent and
Acquisition Sub and may be waived by Parent or Acquisition Sub, in whole or in
part at any time and from time to time, in the sole discretion of Parent and
Acquisition Sub. The failure by Parent or Acquisition Sub at
9.
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
10.
